The Assessment of Reservation Prices of an Intermediate R&D Result and Patent Reward Under Oligopolistic Competitive Behaviour

One of the shortcomings of R&D evaluation is a lack of emphasis on analytical assessment of the value of an on-going R&D project. This paper addresses the problem concerning the distributive aspect of access to superior knowledge. Decision tree analysis and probability models appear to be appropriate tools for assessing the values of an intermediate result and patent reward of a firm's R&D decision in an environment of perfect information and oligopolistic competition. The assessed values are used as minimum prices acceptable to the firm when the knowledge is disseminated to the public. This paper will attempt to resolve this problem through the determination of the appropriate values of the reservation price of the first-stage invention in terms of the final reward and of a patent reward for which the inventor is willing to apply.