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Research Joint Ventures, Optimal Licensing, and the R&D Subsidy Policy

  • Cuihong Fan and Elmar G Wolfstetter
Published/Copyright: September 3, 2008
The B.E. Journal of Theoretical Economics
From the journal The B.E. Journal of Theoretical Economics Volume 8 Issue 1

We reconsider the justifications of the R&D subsidies of Spencer and Brander (1983), by allowing firms to form a research joint venture (RJV) and license innovations. If governments offer unconditional subsidies, an RJV is formed and the strategic benefits of R&D subsidies vanish. Nevertheless, governments subsidize their domestic firms to enhance their bargaining position in the joint venture subgame. If governments offer subsidies conditional on forming resp. not forming an RJV, the game has multiple equilibria: one that restores the Spencer and Brander result, and another in which governments induce the formation of an RJV by a combination of conditional taxes and subsidies.

Keywords: patent licensing; joint ventures; industrial organization
Published Online: 2008-9-3

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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  1. Topics Article
  2. When Stackelberg and Cournot Equilibria Coincide
  3. Conflict and Consensus: A Theory of Control in Organisations
  4. Backward Integrated Information Gatekeepers and Independent Divisions in the Product Market
  5. Identification of Individual Demands from Market Data under Uncertainty
  6. On the Role of Uncertainty in the Risk-Incentives Tradeoff
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  8. Revisiting Independence and Stochastic Dominance for Compound Lotteries
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  11. Purchasing Power Parity with Strategic Markets
  12. Global vs. Local Information in (Anti-)Coordination Problems with Imitators
  13. Costly Evidence Production and the Limits of Verifiability
  14. Research Joint Ventures, Optimal Licensing, and the R&D Subsidy Policy
  15. Comparative Statics and Welfare in Heterogeneous All-Pay Auctions: Bribes, Caps, and Performance Thresholds
  16. Ex Post Private Information and Monopolistic Screening
  17. Passing the Buck in Sequential Negotiation
  18. Bidding Strategies for Simultaneous Ascending Auctions
  19. The Dirty Face Problem with Unawareness
  20. Cost Pass-Through under Delegation
  21. Contributions Article
  22. Empirical Implications of Information Structure in Finite Extensive Form Games
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  24. Forgiving-Proof Equilibrium in Infinitely Repeated Games
  25. A Categorical Model of Cognition and Biased Decision Making
  26. Mechanism Design with Moderate Evidence Cost
  27. Connectivity and Allocation Rule in a Directed Network
  28. Competing for Recognition through Public Good Provision
  29. Principal-Agent Problems with Exit Options
  30. Herd Behavior and Contagion in Financial Markets
  31. A Constructive Proof that Learning in Repeated Games Leads to Nash Equilibria
  32. Advances Article
  33. The Full Surplus Extraction Theorem with Hidden Actions
https://doi.org/10.2202/1935-1704.1432
Keywords for this article
patent licensing; joint ventures; industrial organization

Articles in the same Issue

  1. Topics Article
  2. When Stackelberg and Cournot Equilibria Coincide
  3. Conflict and Consensus: A Theory of Control in Organisations
  4. Backward Integrated Information Gatekeepers and Independent Divisions in the Product Market
  5. Identification of Individual Demands from Market Data under Uncertainty
  6. On the Role of Uncertainty in the Risk-Incentives Tradeoff
  7. Time-to-Build and the Inverse U-Shape Investment-Uncertainty Relationship
  8. Revisiting Independence and Stochastic Dominance for Compound Lotteries
  9. On Competitive Equilibria with Asymmetric Information
  10. A Duopoly Location Toolkit: Consumer Densities Which Yield Unique Spatial Duopoly Equilibria
  11. Purchasing Power Parity with Strategic Markets
  12. Global vs. Local Information in (Anti-)Coordination Problems with Imitators
  13. Costly Evidence Production and the Limits of Verifiability
  14. Research Joint Ventures, Optimal Licensing, and the R&D Subsidy Policy
  15. Comparative Statics and Welfare in Heterogeneous All-Pay Auctions: Bribes, Caps, and Performance Thresholds
  16. Ex Post Private Information and Monopolistic Screening
  17. Passing the Buck in Sequential Negotiation
  18. Bidding Strategies for Simultaneous Ascending Auctions
  19. The Dirty Face Problem with Unawareness
  20. Cost Pass-Through under Delegation
  21. Contributions Article
  22. Empirical Implications of Information Structure in Finite Extensive Form Games
  23. Counter Marginalization of Information Rents: Implementing Negatively Correlated Compensation Schemes for Colluding Parties
  24. Forgiving-Proof Equilibrium in Infinitely Repeated Games
  25. A Categorical Model of Cognition and Biased Decision Making
  26. Mechanism Design with Moderate Evidence Cost
  27. Connectivity and Allocation Rule in a Directed Network
  28. Competing for Recognition through Public Good Provision
  29. Principal-Agent Problems with Exit Options
  30. Herd Behavior and Contagion in Financial Markets
  31. A Constructive Proof that Learning in Repeated Games Leads to Nash Equilibria
  32. Advances Article
  33. The Full Surplus Extraction Theorem with Hidden Actions
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