Get access

The Impact of Market Structure and Learning on the Tradeoff between R&D Competition and Cooperation


  • We would like to thank the Editor and two anonymous referees for their extensive and valuable comments on an earlier version of this paper.


This paper compares R&D competition and cooperation when firms can devote resources to a ‘safe’ investment or a risky R&D investment. When the discovery of a new product creates positive externalities on non-discovering firms, equilibrium investment flow, ex ante investment, and welfare under R&D competition are less than or equal to what they are under research cooperation. With negative externalities, R&D cooperation results in the same or lower ex ante investment than under R&D competition, and social welfare may also be less. Our results have relevance for empirical studies of the impact of R&D cooperation on R&D outcomes.