Uncertainty, spillovers, and cooperative R&D

This paper extends the literature on cooperative R&D in an oligopoly with spillovers. The model has three new features. It introduces uncertainty, focuses on spillover of innovation instead of effort spillover, and offers a new definition of the research joint venture (RJV). The RJV is an arrangement to coordinate R&D efforts and also to share the innovation. Firms form an RJV only if the innovation raises flow industry profit, but independently of the speed of spillovers and the degree of uncertainty. The model is robust when we allow for licensing, the single lab, endogenous spillovers and R&D effort spillovers. (C) 2002 Elsevier Science B.V. All rights reserved.