R&D Organization: Cooperation or Cross-Licensing?

Under the Cross-Licensing system (CL), firms are allowed to trade non cooperatively the results of R&D efforts, and compete in the innovation and production stages. First, the paper proposes a simple modeling of this system. Second, a relevant comparison is made with the Cartelized Research Joint Venture (RJV), the form of R&D cooperation recognized to be the best one. We prove that the Cross-Licensing system may be socially better than the Cartelized RJV. In terms of antitrust policy, for firms, the most favorable collusion mode is Joint Exploitation. We prove that firms are equally tempted by this mode, whether they are under CL or under Cartelized RJV.