The Impact of Patents and R&D Cooperation on R&D Investments in a Differentiated Goods Industry

In this paper, we consider the impact of patents and R&D cooperation on R&D investments in the oligopolistic industry with differentiated products. Four types of firms’ conduct are investigated: R&D competition without patents, R&D competition with patent protection, R&D cooperat...

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Veröffentlicht in:South East European journal of economics and business 2020-06, Vol.15 (1), p.122-133
Hauptverfasser: Karbowski, Adam, Prokop, Jacek
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Sprache:eng
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Zusammenfassung:In this paper, we consider the impact of patents and R&D cooperation on R&D investments in the oligopolistic industry with differentiated products. Four types of firms’ conduct are investigated: R&D competition without patents, R&D competition with patent protection, R&D cooperation, and the full industry cooperation. The obtained results suggest that patents do not necessarily promote R&D investments due to the existence of so called tournament effects. R&D cooperation stimulates R&D investments, but R&D cooperation provides sufficient incentives to create a full industry cartel. Such a cartel works to the detriment of consumers. Our analysis led us to the conclusion that for a relatively low level of R&D spillovers, the policy-makers should promote R&D competition without patent protection among oligopolistic firms. For a relatively high level of R&D spillovers, R&D cooperation enhances innovation, but the regulator should monitor the market for probable collusion.
ISSN:2233-1999
2233-1999
DOI:10.2478/jeb-2020-0010