Academic Journals Database
Disseminating quality controlled scientific knowledge

Research and Development Cooperation between Rivals: A Novel Motive beyond New Knowledge

Author(s): Le Duc Niem

Journal: Technology and Investment
ISSN 2150-4059

Volume: 02;
Issue: 01;
Start page: 47;
Date: 2011;
Original page

Keywords: Product Quality | R&D Cooperation | Knowledge | Motive

The paper examines a motive for R&D cooperation with a rival by considering the behavior of a quality follower in a model of vertically differentiated products. We show that, in some settings, a quality follower has an incentive to contribute money to R&D activity of a quality leader with the sole purpose of making the leader’s products even better. The reason behind this motivation is that the leader’s product quality is serving as an upper-constraint in the decision process of the follower regarding product quality selection. Thus, if the leader’s product quality is raised both firms will be better off.
Affiliate Program     

Tango Rapperswil
Tango Rapperswil