Coordination costs and research joint ventures

Rod Falvey, Joanna Poyago-Theotoky, Khemarat Talerngsri Teerasuwannajak

Research output: Contribution to journalArticleResearchpeer-review

8 Citations (Scopus)

Abstract

We consider a simple oligopoly model where firms engage in cost-reducing R&D and compare two R&D regimes: R&D competition and R&D cooperation in the form of a research joint venture (RJV). We introduce coordination costs for the RJV and examine how these affect the equilibrium outcomes.We find that the performance of the RJV in comparison to R&D competition is sensitive to the level of coordination costs. Although the RJV may no longer conduct a unit of R&D at a lower cost compared to an independent firm in the non-cooperative R&D regime, RJV members can still make savings on their own R&D outlay through information sharing. We establish that there can be profitable but welfare-reducing RJVs and that R&D competition can generate a better outcome depending on the extent of coordination costs.

Original languageEnglish
Pages (from-to)965-976
Number of pages12
JournalEconomic Modelling
Volume33
DOIs
Publication statusPublished - Jul 2013

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Coordination costs
Research joint ventures
Costs
Information sharing
Savings
Oligopoly

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Falvey, R., Poyago-Theotoky, J., & Teerasuwannajak, K. T. (2013). Coordination costs and research joint ventures. Economic Modelling, 33, 965-976. https://doi.org/10.1016/j.econmod.2013.03.005
Falvey, Rod ; Poyago-Theotoky, Joanna ; Teerasuwannajak, Khemarat Talerngsri. / Coordination costs and research joint ventures. In: Economic Modelling. 2013 ; Vol. 33. pp. 965-976.
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Falvey, R, Poyago-Theotoky, J & Teerasuwannajak, KT 2013, 'Coordination costs and research joint ventures' Economic Modelling, vol. 33, pp. 965-976. https://doi.org/10.1016/j.econmod.2013.03.005

Coordination costs and research joint ventures. / Falvey, Rod; Poyago-Theotoky, Joanna; Teerasuwannajak, Khemarat Talerngsri.

In: Economic Modelling, Vol. 33, 07.2013, p. 965-976.

Research output: Contribution to journalArticleResearchpeer-review

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Falvey R, Poyago-Theotoky J, Teerasuwannajak KT. Coordination costs and research joint ventures. Economic Modelling. 2013 Jul;33:965-976. https://doi.org/10.1016/j.econmod.2013.03.005