TECHNOLOGICAL ASYMMETRY AND JOINT PRODUCT DEVELOPMENT

We examine the impact of an increase in technological asymmetry on the success of joint product development ventures, with a view of exploring the free-riding problems inherent in cooperative R&D. We find that if technological diversity increases, then the chances that a joint venture forms at all is reduced. Given that a joint venture forms, however, an increase in technological diversity increases the probability of success. The increase in the effort stream under cooperative R&D is, however, less than the increase in the efficient effort stream, so that the gap between the two increases.