DP1654 | Why Firms Form Research Joint Ventures: Theory and Evidence

Publication Date

30/05/1997

JEL Code(s)

  • L0, L6, O3

Keyword(s)

  • Joint Ventures, Product Market Competition, Research and Development

Programme Area(s)

  • Industrial Organization

Network(s)

Abstract

The literature on research joint ventures (RJVs) has emphasized internalizing spillovers and cost-sharing as motives for RJV formation. In this paper we develop two additional explanations: product market complementarities and firm heterogeneity. We analyse a model of RJVs with asymmetric firms and differentiated products. We then test these various explanations for RJV formation using data now available through the US National Cooperative Research Act.