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Diversification versus co‐operation in R&D investment
Author(s) -
Scott John T.
Publication year - 1988
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090090302
Subject(s) - diversification (marketing strategy) , competition (biology) , investment (military) , economics , monetary economics , business , industrial organization , market economy , ecology , biology , law , marketing , political science , politics
Comparison of the diversification of R&D in the mid‐1970s with the mid‐1980s co‐operative R&D that is protected by the National Co‐operative Research Act of 1984 (NCRA) shows that multi‐industry research coalitions seem to substitute for multi‐industry firms exploiting R&D spillovers. Diversification by individual firms and co‐operation among them can both increase appropriability, but the co‐operative R&D sacrifices competition that is present with diversification alone. The evidence suggests that diversification in the absence of the NCRA may have carried innovative investment toward the social optimum, while the effect of the law may well be to reduce investment and take us away from the social optimum.