Research joint ventures vs. cross licensing agreements: an agency approach

In this paper two broad categories of organizing a cooperative R&D project are compared: a Research Joint Venture (RJV) and a Cross Licensing Agreemen t (CLA). In a non-deterministic R&D setting including asymmetric informatio n, we show that an RJV is more efficient in providing incentives, it allows to capture existing synergies and facilitates the dissemination of the par tners' know-how, which is socially desirable. However, contrary to a CLA, a n RJV faces the risk of opportunistic behavior by the partners regarding th e provision of their know-how to the venture, which could lead a CLA to per form more efficiently and, in some cases, this organization turns out to be superior. (C) 2002 Elsevier Science B.V. All rights reserved.