DEMAND UNCERTAINTY, R&D LEADERSHIP AND RESEARCH JOINT VENTUREs

This paper analyses the desirability of RJV formation when firms may choose their R&D investment before or after any demand uncertainty is resolved. If a R&D leader accommodates a follower, multiple Nash equilibria are possible under both R&D competition and RJV formation. If a R&D leader prevents activity by the follower, this is only expected to be profitable at very low spillover and unit R&D cost levels. Whether R&D leadership when competing in R&D is expected to be more profitable than waiting and forming a RJV will depend on unit R&D costs and spillovers. Maximising expected welfare may require an active role for government.