Pérez-Castrillo, D. and J. Sandonís
International Journal of Industrial Organization – 15 (1997) 51-75

Keywords: R&D, Research Joint Ventures, Technology Policy, Know-how

Abstract: RJVs usually face technical uncertainty, their expected cost typically depending on the know-how disclosed by the partners. However, the partners have little incentive to share their know-how when they are simultaneously competitors in other markets. In this setting, we show that sometimes profitable RJVs do not start when the disclosure of know-how is not contractible, and characterize the incentive contracts when they exist. We also analyze RJVs as an alternative to licensing contracts for the transmission of know-how. Finally, we show that the EEC’s technology policy based on cost subsidies has negative consequences on firms’ incentives to share know-how.