Cooperation in R&D: Patenting, Licensing, and Contracting

  • Sudipto Bhattacharya
  • Claude d’AspremontEmail author
  • Sergei Guriev
  • Debapriya Sen
  • Yair Tauman
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 194)


Innovative activity uses anihd produces knowledge. This is both costly and risky and the resulting product has (at least partially) the main characteristics of a public good: it is non-rival and non-excludable. Without any sort of protection, individual agent would have little incentive to do research for fear of unsuccessful research effort or for fear of imitation by others (through spillovers or free access).

In this chapter, we use game-theoretic concepts to analyze R&D collective arrangements in settings involving both complete and incomplete contracts. The first topic is patent protection and the comparison of the main forms of licensing in various industry contexts, structures or sizes – including the role of various factors such as product differentiation, innovation magnitude, and asymmetric information. The second focus is the long-debated relationship between innovative activity and the intensity of competition. Here, we review the benefits of various types of cooperative R&D agreements in the presence of externalities. The last two topics concern contracting issues. In a complete contracting setting, we review the design of licensing mechanisms allowing for full knowledge sharing under incomplete information. Finally, we consider incomplete contracts designed to deal with cumulative or sequential innovation and the associated moral hazard problems combining research and development efforts, and the possibility of several buyers for the innovation.


Incumbent Firm Incomplete Contract Downstream Firm Sequential Innovation Research Joint Venture 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Sudipto Bhattacharya
    • 1
  • Claude d’Aspremont
    • 2
    Email author
  • Sergei Guriev
    • 3
  • Debapriya Sen
    • 4
  • Yair Tauman
    • 5
    • 6
  1. 1.Department of FinanceLondon School of EconomicsLondonUK
  2. 2.CORE, Universite Catholique de LouvainLouvain-la-NeuveBelgium
  3. 3.New Economic School (Moscow)MoscowRussia
  4. 4.Department of EconomicsRyerson UniversityTorontoCanada
  5. 5.Department of EconomicsStony Brook UniversityStony BrookUSA
  6. 6.Arison School of Business, IDC HerzliyaHerzliyaIsrael

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