Gradual Knowledge Transfer Among Competing Firms First draft: preliminary and incomplete.

We provide a model of informal gradual knowledge pooling among competitors (e.g., know-how, information or R&D). During each period, two firms compete after having simultaneously liberated a fraction of their stocks of knowledge. Since it is possible to free ride, gradualism arises endogenously. Indeed, whereas immediate complete pooling would be ideal it is not incentive compatible. Contrary, gradual-ism offers an exit option which commits firms to honesty, thereby ensuring mutual benefit. Allowing for heterogeneity, we obtain the pace of knowledge transfer and conduct comparative statics. Our framework schematizes a dilemma between competition and frictionless in-tellectual cooperation that might appear, for instance, when firms consider infor-mally sharing their know-how with rivals or contributing to an open access technol-ogy, but fear their counterparts will opportunistically contribute less