Knowledge Intensity and Risk Sharing

  • T. V. S. Ramamohan Rao


It is often necessary to combine formal knowledge (written down, blueprints) with informal knowledge (rules of thumb and heuristic adaptations required to scale up technology) to “work a patent.” Informal knowledge must be provided by the inventor through his participation. Adverse selection of partners and their personal interests (moral hazard) may create risks. These problems have been highlighted in the context of biotechnology in particular. An attempt has been made to model the sharing of knowledge, costs, and returns. R&D, that creates external effects, is generally entrusted to public scientific organizations and transferred to private firms for its adoption. The similarity of issues is highlighted. The advantages of risk sharing have been juxtaposed with dimensions of risk spreading that they involve.


Risk Aversion Large Firm Private Firm Formal Knowledge Incentive Constraint 
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Copyright information

© Springer India 2016

Authors and Affiliations

  • T. V. S. Ramamohan Rao
    • 1
  1. 1.Indian Institute of Technology KanpurKanpurIndia

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