The text comprises three chapters on the industrial organization of research and development (R&D) for innovative processes and products, and the dynamics of firms’ investments in new markets.
The first chapter presents two perspectives on the decision by firms to outsource R&D. In both cases a model is constructed where an independent unit (e.g., a biotech start-up) engages in R&D projects with two sponsors (e.g., big pharma firms). We characterize the technological drivers of the division of labour in R&D activities, the distribution of industry profits, and the incentives to integrate vertically.
The second chapter focuses on the regulatory environment of firms. In a first model, the firms cooperate in R&D before competing in the market. We find that a market share criterion for screening the cooperative agreements that are exempted from antitrust concerns does not facilitate the projects that most benefit consumers. In a second model, the firms compete in R&D before cooperating in the licensing of their patents. We establish that patent pools enhance dynamic efficiency, even more so if they include only technically essential patents.
The third chapter presents two duopoly investment models with market development uncertainty. In the first model, where the firms are not aware of the new demand at the same time, a post-entry flow-profit advantage can imply a higher expected value to the first investor in a pre-emption equilibrium, and less to its rival. In the second model, where the roles of innovator and of subsequent imitator are endogenous, we connect socially optimal intellectual property rights to measurable dynamic demand characteristics.
Section CNU n°05 - Sciences Économiques