Optimal assignment of principalship in cooperative R&D under incomplete information

This paper develops a general equilibrium model with two firms in cooperative R&D projects to investigate the optimal assignment of principalship under incomplete information. We make a distinction between cooperative R&D effort and monitoring effort. When it is costly to sign contracts on efforts under incomplete information, the optimal assignment of principalship in cooperative R&D depends on the interaction between each member's importance in cooperative R&D, the effectiveness of monitoring and the degree of R&D teamwork. © 2011 ISSN 1881-803X.