TI  Vol.2 No.1 , February 2011
Research and Development Cooperation between Rivals: A Novel Motive beyond New Knowledge
Abstract: 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.
Cite this paper: nullL. Niem, "Research and Development Cooperation between Rivals: A Novel Motive beyond New Knowledge," Technology and Investment, Vol. 2 No. 1, 2011, pp. 47-51. doi: 10.4236/ti.2011.21006.

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