Optimal Technology Sharing Strategies in Dynamic Games of R&D

29 Pages Posted: 9 Jan 2014

See all articles by Nisvan Erkal

Nisvan Erkal

University of Melbourne - Faculty of Business and Economics

Deborah Minehart

United States Department of Justice

Date Written: Spring 2014

Abstract

A question central to R&D policy making is the impact of competition on cooperation. This paper builds a theoretical foundation for the dynamics of knowledge sharing in private industry. We model an uncertain research process and ask how the incentives to license intermediate steps to rivals change over time as the research project approaches maturity. Such a dynamic approach allows us to analyze the interaction between how close the firms are to product market competition and how intense that competition is. We uncover a basic dynamic of sharing such that firms are less likely to share as they approach the product market. This dynamic is driven by a trade‐off between three effects: the rivalry effect, the duplication effect and the speed effect. We show that this dynamic can be reversed when duopoly profits are sufficiently low or when the firms have asymmetric research capabilities. We also explore the implications of the model for patent policy, and compare policies targeting early research outcomes with policies targeting late research outcomes.

Suggested Citation

Erkal, Nisvan and Minehart, Deborah, Optimal Technology Sharing Strategies in Dynamic Games of R&D (Spring 2014). Journal of Economics & Management Strategy, Vol. 23, Issue 1, pp. 149-177, 2014, Available at SSRN: https://ssrn.com/abstract=2376555 or http://dx.doi.org/10.1111/jems.12042

Nisvan Erkal (Contact Author)

University of Melbourne - Faculty of Business and Economics ( email )

Victoria, 3010
Australia
+61 3 8344 3307 (Phone)
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HOME PAGE: http://www.nisvanerkal.net

Deborah Minehart

United States Department of Justice ( email )

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