RJVs and Welfare with Knowledge Spillovers: A Dynamic Non--Tournament Model

This paper presents one of the first dynamic frameworks studying the relationship among Research Joint Ventures (RJVs), welfare, and knowledge spillovers. In modeling the dynamics we take three factors into account: the speed of technical progress, the size of the innovation, and the lenght of the disclosure lag necessary to enjoy the spillover. In the non-cooperative R&D regime, we identify three possible equilibria. They are classified, according to the timing of R&D investments, as early, intermediate, and late. The intermediate equilibrium is relevant because--besides providing new insights--it makes interesting the comparison between the non-cooperative game and the RJV regime. We show that RJVs dominate in welfare terms even in presence of low spillovers (differently from the literature following d'Aspremont and Jacquemin (1988) and Kamien extit{et al.} (1992)). Moreover we find that the type of industry in which the innovation is introduced and the size of the R&D output have an important impact in assessing RJV's welfare effect.