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Chapter 5 Strategic R&D with Uncertainty

The Economics of Innovation

ISBN: 978-0-444-53255-8, eISBN: 978-1-84950-537-6

Publication date: 26 July 2008


Uncertainty is introduced into a model of strategic R&D. The formation of an R&D cooperative increases the success rate of R&D. This increase in the R&D success rate can be reinterpreted as the realization of scope economies due to cooperation. It appears that within this setting the range of technological spillovers increases for which the formation of R&D cooperatives is beneficial to society. They are always beneficial if economies of scope are large. Absent the realization of economies of scope the traditional result apply in that the technological spillover should exceed some threshold value for R&D cooperatives to be desirable. If the economies of scope are intermediate this threshold value is lowered.


Hinloopen, J. (2008), "Chapter 5 Strategic R&D with Uncertainty", Cellini, R. and Lambertini, L. (Ed.) The Economics of Innovation (Contributions to Economic Analysis, Vol. 286), Emerald Group Publishing Limited, Bingley, pp. 99-111.



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