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Contracting Institutions and R&D Collaboration Between Nonrivals in Competitive Industry Equilibrium

Year: 2025

Type: article

Abstract: ABSTRACT In a duopoly model, one firm has the option to collaborate in R&D with a third party. Although collaboration can expedite innovation, the third party may unintentionally leak the innovation to the rival firm. Engaging in R&D collaboration can make the rival firm anticipate a free ride, which weakens its incentives for R&D spending. The firm can take legal action against the third party in case of information leakage. Strengthening contracting institutions improves the likelihood of success in such cases. In a competitive industry equilibrium, strengthening contracting institutions only sometimes increases R&D collaboration, industry R&D spending, and the innovation rate.

Source: Managerial and Decision Economics

DOI: 10.1002/mde.4536

Author: Travis Ng

Institution: Chinese University of Hong Kong

Language: English

Topic: Merger and Competition Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,120