R&D Cooperation and the Joint Exploitation of R&D

Abstract

Is R&D cooperation preferred to noncooperative R&D and does the answer depend on how firms choose output? And if antitrust protection is provided to R&D, is it desirable to extend antitrust protection to cooperative production as well? In the authors' model, cooperative R&D is always preferred by both firms and consumers, regardless of how output is chosen. They then show that, though innovation effort and profits are higher when both output and R&D effort are chosen cooperatively, consumer surplus and overall social welfare are higher when cooperation is restricted to R&D.