Partnership in Open Innovation

This paper aims at assessing the importance of the initial technological endowments when firms decide to create R&D agreements. We study a Bertrand duopoly where firms evaluate the returns of an agreement according to its length. A learning process allows us to depict a close connection between firms' technology and the possibility to achieve a positive outcome from creating an agreement. Moreover, as far as learning is modeled as an iterative process, a suitable set of initial conditions is the basic factor leading to successful ventures.