To Reveal or Not to Reveal - the Case of Research Joint Ventures with Two-Sided Incomplete Information

Firms' incentives to form RJVs are analyzed in an incomplete information framework when technological know-how is private information. Firms first decide on cooperation and then compete for a patent in a second price auction. Provided that firms have to indicate their willingness to cooperate by revealing a fraction of their knowhow it can be shown that non-cooperation is always an equilibrium. If this fraction is sufficiently low cooperation can also occur in equilibrium. For intermediate levels of know-how revelation there exists an equilibrium in which only firms with low know-how cooperate