R&D Leadership and Research Joint Ventures

This paper examines the effect of R&D leadership on Research Joint Venture formation. If firms compete in R&D, there is a first (second)-mover advantage, when spillovers are relatively low (high). RJV profits exceed those of R&D leadership, except for a very narrow range of low unit R&D costs and spillovers. For a leader, preventing follower activity is only profitable if unit R&D costs and spillovers are relatively low. If unit R&D costs are sufficiently low, preventing the follower from becoming active may be welfare dominant but not profit maximizing, possibly justifying a role for government policy to subsidise R&D investment