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Collaborative Innovation (or Not?!) when Product Performance is Critical

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Title:Collaborative Innovation (or Not?!) when Product Performance is Critical
Authors:Weber, Thomas
Keywords:Strategy, Information, Technology, Economics, and Society (SITES)
patent race
product commercialization
research collaboration
Date Issued:05 Jan 2021
Abstract:Research and development (R&D) collaborations are horizontal agreements among firms to join forces in their inventive activities. As in the context of the recent COVID-19 global pandemic, such collaborations are often promoted with an argument of increased R&D productivity. In numerous contexts, especially when marginal production costs are low, such as for medications or for software, the consumers' surplus depends critically on the best-performing product available on the market, for -- all else equal -- this product will tend to take a dominant position. Using a simple two-stage model of innovation and subsequent product commercialization on a market with heterogeneous consumers, we show that a noncollaborative patent race with patent protection (for the best product) provides strong innovation incentives, leading to better performing products than a regime of either noncollaborative research without patent protection or collaborative research (with profit sharing).
Pages/Duration:8 pages
Rights:Attribution-NonCommercial-NoDerivatives 4.0 International
Appears in Collections: Strategy, Information, Technology, Economics, and Society (SITES)

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