OPTIMAL ASYMMETRIC STRATEGIES IN RESEARCH JOINT VENTURES

This paper identifies an overlooked implication of models of research joint ventures initiated by d'Aspremont and Jacquemin (1988). Even tho ugh the aggregate R&D cost of identical firms in a research joint vent ure would be lowest if they invested equally to reduce subsequent prod uction costs, nonetheless members may often enlarge their overall join t profit by making unequal investments. Such a strategy raises costs i n the investment stage but may create more than offsetting benefits in the production stage since industry profits an larger there when the firms are of unequal size. When the consideration leading to asymmetry prevails, we find that, in contrast to previous work, a research join t venture can raise welfare even when there are no spillovers. (C) 199 8 Elsevier Science B.V.