Collaboration in R&D: An assessment of theoretical and empirical findings

Focusing on the management of voluntary and involuntary transfers of know-how in imperfect competition, the Industrial Organisation models on R&D cooperation have generated results that seem to be robust across a wide variety of models. This paper reviews the mainstream IO models and results. A major finding is that when spillovers exceed some critical level, cooperation in R&D is beneficial to technical progress and leads to higher profits for the partners. Trying to further enrich these models, recent theoretical developments have studied the issues of stability of R&D cooperation, explaining why attractive alliances are not always formed. The various mechanisms, which this literature suggests to turn R&D cooperation into stable profitable agreements, are discussed. Finally, the scarce empirical evidence that exists to test some of the theoretical hypotheses is reviewed.