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Empirical evidence strongly suggests that R&D increases a firm’s "absorptive capacity" (its ability to absorb spillovers from other firms) as well as contributing directly to profitability. We explore the theoretical implications of this. We specify a general model of the absorptive capacity...
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A patent challenger who defeats a patent wins spoils that it must share with the world, including all its competitors. This forced sharing undercuts an alleged infringer's incentive to stay in the fight to the finish - especially if the patent owner offers an attractive settlement. Too many...
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&D race while maintaining the collusive equilibrium in a repeated-game framework. Innovation under competitive R&D creates … inter-firm asymmetries, which destabilizes the collusive equilibrium. Innovation sharing through cooperative R&D preserves … the collusion stability but also raises social welfare. Interestingly, a welfare improvement is less likely if innovation …
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