"In this paper we consider why firms sometimes choose an external development path for their own inventions, despite the costs of contracting and the risks of opportunitistic behaviour and expropriation." -- Abstract

Scant discussion exists in the literature about the relative design merits of various R&D schemes and most authors treat program design as a black box. In this paper, we assess the design features of three major forms of R&D support: entitlement schemes, competitive schemes and industry R&D...