Abstract
The aim of this paper is to present the concept of solution of the incentive conflict that exists within R&D cooperation between firms that share know-how. In the relevant literature formal and legally-based solutions to the above conflict are discussed, i.e. (i) know-how contracting and (ii) know-how licensing. In the following work the solution based on the idea of selecting the value of fixed set-up cost of cooperation is presented. The fixed set-up cost of cooperation can be treated as a strategic device that can be used by firms to stabilize R&D cooperation. On the basis of formal analysis it is found that optimal levels of know-how revealed by all cooperating firms rise with the value of fixed set-up cost of R&D cooperation borne by any of cooperating firms. This novel result seems salient to the management practice in the field of R&D cooperation.
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