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Feasibility, Stability, and Multiple Research Joint Ventures
Author(s) -
Yao Zhiyong,
Zheng Bingyong
Publication year - 2014
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12041
Subject(s) - imperfect , joint venture , joint (building) , incentive , industrial organization , microeconomics , business , economics , new ventures , perfect information , stability (learning theory) , entrepreneurship , commerce , computer science , finance , architectural engineering , philosophy , linguistics , machine learning , engineering
We study multiple research joint ventures (RJVs) using a repeated game with imperfect monitoring. Compared with the single joint venture case, we show that cooperation in multiple joint ventures creates two advantages for participating firms. First, by linking decisions together across all joint ventures firms can mitigate the likelihood of cooperation breakdowns following bad R&D outcomes. Second, as the incentive cost to sustain cooperation is independent of the number of joint ventures, the economy of scale effect reduces the efficiency loss due to imperfect monitoring.