r d policies trade and process innovation we set up a simple trade model with two countries hosting one firm each the firms invest in cost reducing r d and each government may grant r d subsidies to the domestic firm we show that it is optimal for a government to provide higher r d subsidies the lower the level of trade costs even if the firms are independent monopolies if firms produce imperfect substitutes policy competition may become so fierce that only one of the firms survives international policy harmonization eliminates policy competition and ensures a symmetric outcome however it is shown that harmonization is not necessarily welfare maximizing the optimal coordinated policies may imply an asymmetric outcome with r d subsidies to only one of the firms

an economic model of soil conservation by introducing soil depth and soil loss into a simple model of agricultural production this paper seeks to determine when the private path of erosion differs from the socially optimal path considering the depletion of soil only and abstracting from the environmental disruption caused by erosion the paper argues that under most institutional arrangements the social and private rates of erosion are the same the paper concludes that public policy should be directed toward reducing erosion only when it leads to significant pollution externalities

how fast should we graze the global commons unlike the vast preponderance of planets earth has been bequeathed a hospitable environment in which to thrive up to now man s activities have affected this environment negligibly scientists are becoming convinced however that release of carbon dioxide co2 from combustion of fossil fuels will lead to a significant modification of the global climate see woodwell how should we think about such a destruction of our heritage should it be treated as anathema like bondage or should the pace and extent of use of our global commons be subject to the same reasoned balancing of costs and benefits as other economic activities the present paper takes the second approach asking how fast the global economy should allow a buildup of atmospheric co2 the first section reviews the current scientific knowledge on this subject while the second puts this into an optimal growth framework the third section then presents a numerical example while the last presents some realistic policy views on the subject this abstract was borrowed from another version of this item

negotiating a uniform emissions tax in international environmental agreements abstract a consensus appears to be emerging that a global carbon tax is the best policy for managing greenhouse gas emissions emissions tax systems are relatively straightforward cost effective and can generate revenues used to offset other distortionary taxes moreover recent theoretical research weitzman 2014 has demonstrated that under some conditions the globally efficient tax rate can be implemented through a majority voting rule we extend this area of research by examining a uniform emissions tax system in the framework of an international environmental agreement in which only countries that voluntarily participate are subject to the tax we show that in the simplest situation in which countries have identical marginal benefit and cost functions the largest stable agreement consists of two countries and the tax system has little impact on abatement levels our analysis highlights that by ignoring the participation decision and assuming commitment by all parties the efficiency gains from a uniform emissions tax system are overstated

cooperative and noncooperative r d in an oligopoly with spillovers this paper examines the positive and normative effects of cooperative r d whereby member firms commit themselves to the joint profit maximizing level of r d in a precompetitive stage but remain fierce competitors in the product market vis a vis noncooperative r d socially first best r d and socially second best r d in the presence of sufficiently large r d spillovers neither noncooperative nor cooperative equilibria achieve even second best r d levels in the absence of spillover effects however while the cooperative r d level remains socially insufficient the noncooperative level may overshoot first and second best levels of r d copyright 1992 by american economic association

an analysis of cooperative research and development i analyze the effects of cooperative research whereby member firms agree to share the costs andfruits of a research project before they undertake it in this model industrywide agreements tend to have socially beneficial effects when the degree ofproduct market competition is low when there are r d spillovers in the absence of cooperation when a high degree of sharing is technologically feasible and when the agreement concerns basic research rather than development activities i show that a royalty free cross licensing agreement among any number offirms lowers the equilibrium level of innovation even though it increases the efficiency of r d through sharing

steering the climate system using inertia to lower the cost of policy common views hold that the efficient way to limit warming to a chosen level is to price carbon emissions at a rate that increases exponentially we show that this hotelling tax on carbon emissions is actually inefficient the least cost policy path takes advantage of the climate system s inertia to delay reducing emissions and allow greater cumulative emissions the efficient carbon tax follows an inverse u shaped path and grows more slowly than the hotelling tax economic models that assume exponentially increasing carbon taxes are overestimating the cost of limiting warming overestimating the efficient near term carbon tax and overvaluing technologies that mature sooner

the impact of classes of innovators on technology financial fragility and economic growth in this article we study innovation processes and technological change in an agent based model by including a behavioral switching among heterogeneous innovative firms the model is able to replicate via simulations well known industrial dynamic and growth type stylized facts the main original element of the model is that firms are allowed to endogenously change among three different classes namely single innovators collaborative innovators and imitators moreover our analysis focuses on the impact of these three innovation categories on micro meso and macro aggregates we find that collaborative companies are those having the highest positive impact on the economic system furthermore we have paid particular attention to the role of credit market in promoting smart growth for this purpose we analyze the role of banks as sources of external funds for innovative entrepreneurs our results suggest a trade off between short term profit maximization and long term efficiency which prevents banks to foster investment in r d and technological progress the model is then used to study the effect that different innovation policies have on macroeconomic performance

dynamic adjustment in the u s dairy industry a dual model is used to examine the dynamic structure of the u s dairy industry properties implied by the theory of the competitive firm and independent adjustment of two quasi fixed inputs labor and herd size are tested and not rejected instantaneous adjustment however is soundly rejected for each quasi fixed input input adjustment to optimal levels is estimated to take about two years for labor and ten for cows quality adjustments of the labor and cow series do not fully embody the technological change that has occurred in this industry over the study period

the multivariate flexible accelerator model its empirical restrictions and an application to u s manufacturing this paper derives an exhaustive set of restrictions implied by the multistock flexible accelerator specification of the adjustment cost model for the firm the flexible accelerator specification of the demand for capital and labor is estimated using u s manufacturing annual data for the 1947 1976 period the consistency of the data with the model is examined by testing the validity of the derived restrictions finally the conditions which permit aggregation over firms are determined and tested empirically the flexible accelerator specification has been popular in the empirical literature on interrelated investment and employment decisions see nadiri and rosen 38 coen and hickman 10 and schramm 40 more recent examples include sargent 39 berndt fuss and wavermann 4 berndt and morrison 6 and meese 34 under suitable assumptions the specification may be rationalized by the adjustment cost model of the firm eisner and strotz 13 lucas 30 mortensen 35 extends the work of lucas and derives some empirically testable restrictions of the accelerator specification that are implied by the adjustment cost framework the broad objective of this paper is to provide a more rigorous and comprehensive test of the adjustment cost model than is presently found in the literature this objective is achieved in three stages first we offer an alternative derivation of the mortensen restrictions and more importantly we prove theorem 1 that his restrictions are exhaustive i e we establish an integrability result for the flexible accelerator adjustment cost model second the flexible accelerator specification of the demand for capital and labor is estimated using total u s manufacturing annual data for the 1947 76 period it is assumed that firms minimize expected production costs subject to a technology which implies that capital and labor stocks are costly to adjust while a third factor materials is freely adjustable the consistency of the data with the adjustmentcost framework is examined by testing for the validity of the derived restrictions further we test the validity of some separability restrictions on the adjustmentcost technology that to varying degrees are imposed a priori in all of the cited empirical studies finally we provide a complete characterization of the individual firm technologies which justify the common assumption of the existence of a representative firm this problem of aggregation over firms which has been

heterogeneity of southern countries and southern intellectual property rights policy we develop a model with one innovating northern firm and heterogeneous southern firms that compete in a final product market we assume southern firms differ in their ability to adapt technology and study southern incentives to protect intellectual property rights we find that in a non cooperative equilibrium governments resist ipr protection but collectively southern countries benefit from some protection we show that in general countries with more efficient firms prefer higher collective ipr protection than those with less efficient firms given the aggregate level of ipr protection it is more efficient if the more efficient countries have weaker ipr protection les auteurs developpent un modele dans lequel coexistent une entreprise innovatrice du nord et des entreprises heterogenes du sud qui se concurrencent dans un marche de produit final on postule que les entreprises du sud different dans leur capacitea adopter la technologie et on etudie les differentes incitations au sud a proteger les droits de propriete intellectuelle dpi il appert que dans un equilibre sans cooperation les gouvernements resistent a la pression pour qu on protege les dpi mais que collectivement ils beneficient de cette protection on montre qu en general les pays dont les entreprises sont les plus efficaces supportent une protection collective des dpi plus robuste que ne le font les pays dont les entreprises sont moins efficaces le niveau general de protection des dpi etant donne c est plus effectif si les pays les plus efficaces ont des niveaux de protection des dpi plus faibles

innovative strategic groups in multinational industries abstract differences in innovative strategies between groups of domestic and multinational enterprises are analyzed within a two stage game model that incorporates the asymmetries in transaction costs between the two species of enterprises nash and cooperative behaviour is shown to result in different equilibrium r d strategies with the multinational companies doing typically more r d for larger markets and domestic companies focusing on specific market segments survey data from companies operating in eleven high tech multinational industries in belgium provide support for these strategic differences and show how they are related to company performance

cooperation in r d the case of patent infringement agreements abstract this paper provides an insurance based argument behind patent infringement agreements pia such agreements constitute a form of cooperation in an otherwise non cooperative environment we develop a model where firms initially hold certain patents and undertake further r d by pursuing the latter they face a positive probability of infringing the patents held by the other a prior infringement agreement generates a binding contract so that such infringements would go unpunished if the infringing probability is not too low firms would have incentive to sign an agreement and sacrifice the monopoly option but this depends on the information structure about the patent infringement and search costs such a prior agreement is then compared and contrasted with a suitably designed ex post contract

the effectiveness of public sponsored training revisited the importance of data and methodological choices this article revisits the effectiveness of public sponsored training programs for germany accounting for dynamic selection into heterogeneous programs we carefully assess to what extent various aspects of our empirical strategy such as conditioning flexibly on employment and benefit histories the availability of rich data handling of later program participations and further methodological choices affect our estimates our results imply pronounced negative lock in effects in the short run and positive medium run effects on employment and earnings when job seekers enroll after having been unemployed for some time we find that data and specification issues can have a large effect

the impact of active labour market programmes on the duration of unemployment in switzerland this article evaluates the effects of swiss active labour market programmes on the job chances of unemployed workers the main innovation is a comparison of two important dynamic evaluation estimators the matching estimator and the timing of events estimator we find that both estimators generate different treatment effects according to the matching estimator temporary subsidised jobs shorten unemployment duration whereas training programmes and employment programmes do not in contrast the timing of events estimator suggests that none of the swiss active labour market programmes shortens unemployment duration the aim of the present article is to study the impact of active labour market policies almps on the duration of unemployment in switzerland the new swiss almps reflect the increasing consensus among policy makers that actively assisting the unemployed in job search is preferable to simply providing them with passive income support the danger is so the argument goes that reliance on passive income support may reduce work incentives and job search activities and therefore increase the risk of long term unemployment almps are seen by many as the key to minimise these risks the question how participation in almp measures affects labour market histories of individuals has been the subject of substantial debate the main problem is that labour market outcomes for participants may be systematically different from non participants

absorptive capacity and connectedness why competing firms also adopt identical r d approaches abstract this paper explores the endogenous determination of r d appropriability through the firms choice of r d approaches whereas identical broad r d approaches connect firms with their r d environment and maximize absorptive capacities the opposite holds for idiosyncratic r d approaches our model shows that competing firms choose identical r d approaches in order to maximize knowledge flows between each other in essence this frees firms from the prisoner s dilemma of aggressive investment in r d our analysis contrasts with kamien and zang s 2000 kamien m zang i 2000 meet me halfway research joint ventures and absorptive capacity international journal of industrial organization 18 995 1012 finding that competing firms chose idiosyncratic r d approaches we demonstrate that their model also yields a nash equilibrium for broad identical r d approaches

alleviating soil erosion pollution stock externalities alternative roles for government abstract this paper addresses two temporal externalities due to agriculture soil erosion and related pollution the possibility of decentralization of decisions the appropriate role of a resource manager and the efficiency of alternative policies are examined using traditional welfare economics concepts for a two sector model of rural urban linkage three alternative types of policies can be socially efficient but imply different involvement by government and have different knowledge requirements a pigouvian policy requires full information a bargaining solution involves government only in setting an entitlement but it may require too much knowledge by rural households in terms of understanding dynamic environmental relationships a third way is that government and rural households be co producers of environmental goods this concept assigns government the responsibility for maintaining knowledge about environmental relationships and government is a participant in a market system that determines prices for environmental related goods

on the role of input and output spillovers when r d projects are risky abstract this paper analyzes the impact of input and output spillovers on the expected effective cost reductions in a two stage model of r d where all r d projects are risky it is shown that relative to the deterministic case output spillovers tend to reduce expected cost reductions whereas input spillovers tend to increase investment in r d and hence expected cost reductions in particular the relations between cost reductions in the presence of input and output spillovers known from deterministic models may be reversed under certain parameter constellations

technical change uncertainty and investment the expected investment dynamics of the risk neutral firm is examined in the presence of uncertainty in the future evolution of the real wage and the stock of technical knowledge a model of the adjustment cost firm is developed that is characterized by quasi fixed factor augmenting technical change that is taken exogenously by the firm the effect of wage and technical change uncertainty on investment behavior is assessed using comparative stochastic dynamic analysis

uncertain climate change and the international policy response abstract the implications of alternative policy responses to uncertain climate change are analyzed within the context of a simple dynamic economic model the analysis emphasizes two sources of uncertainty that surround climate change scientific uncertainty about how greenhouse gas emissions affect the climate and natural climatic variability the analysis also incorporates an economy s ability to mitigate climate changes through emissions reductions as well as its ability to adapt to such changes through adjusting production decisions while the model is very stylized and excludes some broader issues of social optimality and the allocation of rights to resources across generations basic implications of uncertainty in a dynamic world are highlighted that have not been previously discussed these results suggest that analysts will have a difficult time trying to determine whether a certain emissions strategy improves economic efficiency whether the benefits are greater than the costs when uncertainty is explicitly incorporated into the analysis

on the organization of cooperative research and development theory and evidence abstract it has become increasingly prevalent that business firms often rival firms join forces in cooperative r and d to develop new technologies that they can use in their downstream business equity research joint ventures and non equity co development are the two major modes of organization and they differ in how ownership rights over newly developed technologies are assigned this paper addresses the question of when cooperative r and d should be carried out in a research joint venture as opposed to a co development program in a setting of contractual incompleteness the nature of the downstream business of participating firms is shown to determine the organization of cooperative r and d empirical evidence that is consistent with the theoretical analysis is also presented

principles of dynamic optimization in resource management abstract the type of resource problem amenable to static analysis is distinguished from that requiring dynamic analysis possibly due to the apparent complexity of optimal control theory methods often dynamic models have not been applied where they would be appropriate in this article dynamic programming arguments are used to derive optimality conditions directly and simply they are derived for a renewable resource such as a fishery but they have application to resource management in general the approach is illustrated by examples to the extraction of a depletable resource to feeding for weight gain and to applying fertilizer when some fertilizer carriers over from one crop season to another conditions for the optimal replacement of biological units are also considered

optimal abatement technology adoption based upon learning by doing with spillover effect abstract we specify a general model of the dynamic abatement technology adoption process and show how the accumulated experience among them can alter the adoption timing learning by doing lbd effect is considered to describe the reduction of the costly price to the adoption moreover spillovers effect which reflects how accumulated experience can be shared among different technologies is integrated into the learning process to ensure the specification convincing some reasonable assumptions are considered such as one abatement technology must conduct its own experience in order to realize the spillover besides to investigate how the abatement process is influenced by the technology allocation under the spillovers effect an endogenous emission path is considered to necessitate a meaningful optimization problem finally apart from obtaining some basic properties of the model we implement an empirical study to verify the effectiveness of the model data from the iron industry in china is used to specify the process which can highlight the spillovers effect among different technologies from a sector angle in the results we find that intrinsic mechanism in the model results in the interplay among abatement coefficient spillover factor and the growing rate of the emission etc collaborative relationships between variables are discussed as well

controlling stock externalities flexible versus inflexible pigovian corrections abstract this paper examines the use of inflexible pigovian taxes subsidies to correct a stock externality an optimal control framework is first used to characterize the first best path for a pigovian correction that varies continuously this first best path is then contrasted with inflexible second best paths in which the level of the correction can be set only once or twice the optimal timing of a fixed one time correction is also studied a deferment of this correction is desirable when the initial state of the environmental stock is less deteriorated than the first best steady state or the adjustment costs are sufficiently great

constant utility paths and irreversible global warming this paper shows that the hartwick rule for sustainable utility with depletable resources still applies to the case of the greenhouse effect from fossil fuel carbon emissions although a carbon tax is necessary for sustainable utility it is sufficient that the sum of net energy rents and carbon tax revenues is invested in reproducible capital examination of recent savings rates and energy cost shares suggests that this may be difficult to achieve with current global savings rates jel classification q32

simple rules for climate policy and integrated assessment a simple integrated assessment framework that gives rules for the optimal carbon price transition to the carbon free era and stranded carbon assets is presented which highlights the ethical economic geophysical and political drivers of optimal climate policy for the ethics we discuss the role of intergenerational inequality aversion and the discount rate where we show the importance of lower discount rates for appraisal of longer run benefit and of policy makers using lower discount rates than private agents the economics depends on the costs and rates of technical progress in production of fossil fuel its substitute renewable energies and sequestration the geophysics depends on the permanent and transient components of atmospheric carbon and the relatively fast temperature response and we allow for positive feedbacks the politics stems from international free rider problems in absence of a global climate deal we show how results change if different assumptions are made about each of the drivers of climate policy our main objective is to offer an easy back on the envelope analysis which can be used for teaching and communication with policy makers

european market integration through technology driven m as merger and acquisitions m as have been an important tool for reorganizing the european market since the establishment of european economic and monetary union this article suggests that european integration helped and encouraged european firms to source technology across national borders in europe establishing european innovative firms the figures confirm that once barriers impeding the free movement of capital goods and labour had fallen european firms used m as intensively to enter foreign european markets enhancing technology competencies is found to be one of the main motives for cross border acquisitions in the 1990s but is not a factor in domestic acquisitions over the same period

optimal r d levels when firm j benefits from firm i s inventive activity abstract we amend the static model of industry structure in dasgupta and stiglitz to include external benefits from a firm s r d now the market can be seen to underinvest in r d relative to the social optimum the work of mansfield suggests that such external benefits are pervasive

active labor market policy evaluations a meta analysis this article presents a meta analysis of recent microeconometric evaluations of active labour market policies we categorise 199 programme impacts from 97 studies conducted between 1995 and 2007 job search assistance programmes yield relatively favourable programme impacts whereas public sector employment programmes are less effective training programmes are associated with positive medium term impacts although in the short term they often appear ineffective we also find that the outcome variable used to measure programme impact matters but neither the publication status of a study nor the use of a randomised design is related to the sign or significance of the programme estimate

labour market effects of retraining for the unemployed the role of occupations abstractwe analyse the impact of retraining for unemployed low skilled job seekers in germany this extensive training programme leads to a formal vocational degree which is often required to access certain professions applying statistical matching methods we find that on average after a period with large lock in effects retraining strongly increases the employment probability of participants especially women we add to the literature by estimating the employment effects for different occupations for which participants are trained our results show that there are substantial differences depending on the occupation as the composition of trained occupations differs for men and women segregation could be a driver of higher employment effects for women however comparisons of men and women trained for the same occupations reveal that even after controlling for segregation women profit more from retraining while caseworkers are instructed to choose professions with high labour demand other aspects

a dynamic game of r and d patent protection and competitive behavior a theory of dynamic optimal resource allocation to r and d in an n firm industry is developed using differential games this technique represents a synthesis of the analytic methods previously applied to the problem static game theory and optimal control the use of particular functional forms allows the computation and detailed discussion of the nash equilibrium in investment rules this paper addresses the problem of resource allocation to research and development among the important issues that a firm engaging in r and d must evaluate are uncertainty regarding the feasibility and profitability of a particular innovation the possibility of a protracted development period the possibility that a rival firm may innovate first capturing either a patent or a significant share of the new market the possibility that a rival firm may imitate the innovation and appropriate some of the profits in the new market in what follows we will develop a theory of optimal resource allocation to research and development which incorporates the aspects of r and d enumerated above we will use a dynamic game theoretic analysis determining the nash equilibrium strategies for n identical firms the availability of perfect patent protection is shown to accelerate development of the innovation and the effect of increasing rivalry is addressed the impact of increasing rivalry on nash equilibrium investment in r and d depends upon the degree of appropriability of rewards if patent protection is perfect then increasing the number of nash rivals results in increased r and d effort however when imitation is rewarded the opposite may be true finally some notions of competitive and perfectly competitive equilibrium are examined in the context of the model developed below

the effects of welfare to work program activities on labor market outcomes studies examining welfare to work program effectiveness present mixed and sometimes discrepant findings partly due to research design data and methodological limitations using administrative data on missouri and north carolina welfare recipients we substantially improve on past estimation approaches to identify the distinct effects of each state s welfare to work subprograms assessment job search assistance and job readiness training and more intensive programs designed to augment human capital more intensive training is associated with greater initial earnings losses but also greater long run earnings gains the negative program impacts we observe in quarters immediately following participation turn positive by the second year after participation

cost reduction competition and industry performance in many markets firms compete over time by expending resources with the purpose of reducing their costs sometimes the cost reducing investments operate directly on costs in many instances they take the form of developing new products that deliver what customers need more cheaply therefore product development can have the same ultimate effect as direct cost reduction in fact if one thinks of the product as the services it delivers to the customer in the way that lancaster pioneered then product development often is just cost reduction

cooperative and noncooperative r d in duopoly with spillovers contrary to the usual assumption made in most oligopoly models relations among firms are seldom of a wholly cooperative or noncooperative type in many situations they compete in some fields while they cooperate in others an important example is the case of cooperative research efforts bringing fierce competitors together two types of agreement are observed first r d cooperation can take place at the so called precompetitive stage companies share basic information and efforts in the r d stage but remain rivals in the market place 1 a second type of agreement involves an extended collusion between partners creating common policies at the product level the usual justifications of this extension are the difficulties of protecting intellectual property the idea is then to allow partners who have achieved inventions together to also control together the processes and products which embody the results of their collaboration in order to recuperate jointly their r d investments 2 what could be expected from these types of agreement is a reduction in r d expenditures because of less wasteful duplication and a reduction of total production because of more reprinted from the american economic review 78 5 1133 1137 1988 center for operations research econometrics 1348 louvain la neuve belgium we are grateful to jean

automation and labor force participation in advanced economies macro and micro evidence abstract technological advances raise productivity and growth but are also likely to reshape labor markets we examine the impact of automation on aggregate labor force participation rates and individuals attachment to the workforce in advanced economies cross country analysis which leverages the variation in the routinizability of occupations and occupational composition points to significant negative effects of automation on the participation rates of prime age men and women individual level analysis confirms that workers previously employed in routinizable occupations are more likely to drop out of the labor force encouragingly higher spending on active labor market programs and education are however associated with smaller negative effects of technological change on participation

long run effects of public sector sponsored training in west germany between 1991 and 1997 west germany spent on average about 3 6 bn euro per year on public sector sponsored training programmes for the unemployed we base our empirical analysis on a new administrative data base that plausibly allows for selectivity correction by microeconometric matching methods we identify the effects of different types of training programmes over a horizon of more than seven years using bias corrected weighted multiple neighbours matching we find that all programmes have negative effects in the short run and positive effects over a horizon of about four years however for substantive training programmes with duration of about two years gains in employment probabilities of more than 10 points appear to be sustainable but come at the price of large negative lock in effects

uncertainty in the theory of renewable resource markets the natural growth rate of most renewable resource stocks is in part stochastic this paper examines the implications of such ecological uncertainty for competitive equilibrium in a market with property rights we show that stochastic fluctuations add a risk premium to the rate of return required to keep a unit of stock in situ and we examine the effects of fluctuations on resource rent examples are used to show that extraction can increase decrease or be left unchanged as the variance of the fluctuations increases depending on the extent of market self correction regulatory implications are also discussed renewable resource economics has traditionally been concerned with the study of dynamically optimal harvesting policies given a deterministic function for the natural growth of the resource stock issues have included the existence and characteristics of steady state equilibria for the optimally managed resource the need for and design of regulatory policies to prevent over exploitation and conditions under which as a social optimum or otherwise the resource will be exploited to extinction 1 much of this work has been based on the assumption of a fixed and exogenous price for the harvested resource typically resulting in bang bang solutions for the harvesting policy however some recent papers make price endogenous and thereby describe how the extraction rate and the rate of return and asset value of the resource behave in a competitive market with property rights 2

the tree cutting problem in a stochastic environment the case of age dependent growth abstract harvest policies are derived for growing biological assets e g forests livestock subject to stochastic age dependent growth and price uncertainty the task posed is analyzed as a continuous time optimal stopping problem for diffusion processes both single and ongoing rotation problems are considered qualitative comparative static and numerical results are provided

breaking up a research consortium inter firm r d collaborations through contractual arrangements have become increasingly popular but in many cases they are broken up without any joint discovery we provide a rationale for the breakup date in r d collaboration agreements more specifically we consider a research consortium initiated by a firm a with a firm b b has private information about whether it is committed to the project or a free rider we show that under fairly general conditions a breakup date in the contract is a second best optimal screening device for firm a to screen out free riders with the additional constraint of renegotiation proofness a can only partially screen out free riders entry by some free riders makes sure that a does not have an incentive to renegotiate the contract ex post we also propose empirical strategies for identifying the three likely causes of a breakup date adverse selection moral hazard and project non viability

the risk of policy tipping and stranded carbon assets if global warming is to stay below 2 c there are four risks of assets stranding first substantial fossil fuel reserves will be stranded at the end of the fossil era second this is true for exploration capital too third unanticipated changes in present or expected climate policy cause discrete jumps in today s valuation of physical and natural capital fourth if timing and intensity of climate policy are uncertain revaluation of assets occurs as uncertainty about future climate policy is resolved to highlight these four effects we use an analytical model of investment in exploration capital with intertemporal adjustment costs reserves depletion and market capitalization and calibrate it to the global oil and gas industry climate policy implements a carbon budget commensurate with 2 c peak warming and we allow for immediate or delayed carbon taxes and renewable subsidies the social welfare ranking of these instruments is inverse to that of the oil and gas industry which prefers renewable subsidy and delaying taxes for as long as possible we also pay attention to how the legislative risk of tipping into policy action affects the timing of the end of the fossil era the profitability of existing capital and green paradox effects

networks of collaboration in oligopoly abstract in an oligopoly prior to competing in the market firms have an opportunity to form pair wise collaborative links with other firms these pair wise links involve a commitment of resources and lead to lower costs of production of the collaborating firms we study the incentives of firms to form links and the architecture of the resulting collaboration network we find that incentives to form links are intimately related to the nature of market competition our analysis also suggests that collaborations are used by firms to generate competitive advantage and that strategically stable networks are often asymmetric with some firms having many links while others have few links or are isolated specifically we show that networks with the dominant group architecture stars and inter linked stars are stable we also present some results on the architecture of socially efficient networks

on additive spillovers and returns to scale in r d abstract this paper explores economically meaningful forms of cost functions for process research and development in the presence of imperfect appropriability of inventive output we propose as a central criterion to be satisfied by the knowledge production process that a given r d investment should always produce more cost reduction if devoted to one lab rather than two independent labs operated under natural spillovers with input spillovers this postulate is broadly satisfied however with output spillovers this is generally not the case for r d technologies having decreasing returns to scale we identify economically plausible restrictions on the size of spillovers and on the properties of the r d cost function so as to bring about compatibility with the above postulate some empirical evidence in support of both the criterion and of its theoretical implications is discussed

research note channel structure with knowledge spillovers we study two main questions in this paper 1 how do spillovers of knowledge created by manufacturers investments in process innovation affect channel structure and effort investment incentives 2 what are the interactions between organizational incentives to form joint ventures and strategic alliances with competitors and coordinate decisions vertically with downstream channel members we focus on situations where spillovers are involuntary firms innovative activities are nonoverlapping and firms benefit directly from the results of competitors innovations under these conditions we find that spillovers in process knowledge increase the likelihood of observing decentralized channel structures surprisingly decentralized manufacturers invest more in process innovation than perfectly coordinated manufacturers do when spillovers are large moreover in industries where large spillovers exist horizontal cooperation among manufacturers induces higher levels of process innovation investments than channel coordination does from a public policy perspective however the desirability of such cooperative arrangements among competitors depends on channel structure joint ventures among decentralized manufacturers are more likely to meet the regulators criteria of raising effort investments than cooperation among integrated manufacturers would be investment incentives are best provided when firms share their process knowledge and are buffered from subsequent price competition by independent retailers

no regret potentials and technical innovation a viability approach to integrated assessment of climate policies abstract this paper aims to demonstrate the advantages of a sequential approach to decision making in climate policies this sequential approach is necessary because of the uncertainties regarding both the avoided costs of climate change and the costs of ghg emission abatement this assessment focuses on the minimization of learning time the reduction of technical and institutional inertia and the possible unexpected non linearities in abatement curves a stylized representation of so called no regret short term potentials of long term innovation trends and of backstop technologies is used we show that if we do take care of the inertia constraints in the decision process both policies namely the no regret and the innovation process exploitation becomes crucial in terms of minimization of the learning time

persistence of innovation in dutch manufacturing is it spurious this paper studies the persistence of innovation and the dynamics of innovation output in dutch manufacturing using firm data from three waves of the community innovation surveys cis pertaining to the periods 1994 1996 1996 1998 and 1998 2000 we estimate by maximum likelihood a dynamic panel data type 2 tobit model accounting for individual effects and handling the initial conditions problem we find that there is no evidence of true persistence in achieving technological product or process innovations while past shares of innovative sales condition albeit to a small extent current shares of innovative sales

the learning curve and optimal production under uncertainty this article examines the implications of the learning curve in a world of uncertainty we consider a competitive firm whose costs decline with cumulative output because the price of the firm s output evolves stochastically future production and cumulative output are unknown and are contingent on future prices and costs we derive an optimal decision rule that maximizes the firm s market value produce when the price exceeds a critical level which is a declining function of cumulative output we show how the shadow value of cumulative production the total value of the firm and the decision to produce depend on the volatility of the price and other parameters uncertainty increases the critical price required for the firm to produce but also increases the value of thefirm thus during periods of high volatility firms facing a learning curve ought to be producing less but are worth more

cooperative r d under uncertainty with free entry abstract this paper analyzes the effects of cooperative r d arrangements in a model with stochastic r d and output spillovers our main innovation is to allow for free entry in both the r d race and product market moreover in contrast with the literature we assume that cooperative r d arrangements do not have to include all the firms in the industry we show that sharing of research outcomes is a necessary condition for the profitability of cooperative r d arrangements with free entry the profitability of rjv cartels depends on their size subsidies may be desirable in cases of larger rjvs since they are the ones which are less likely to be profitable

on international equity weights and national decision making on climate change abstract estimates of the marginal damage costs of carbon dioxide emissions require the aggregation of monetised impacts of climate change over people with different incomes and in different jurisdictions implicitly or explicitly such estimates assume a social welfare function and hence a particular attitude towards equity and justice we show that previous approaches to equity weighting are inappropriate from a national decision maker s point of view because domestic impacts are not valued at domestic values we propose four alternatives sovereignty altruism good neighbour and compensation with different views on concern for and liability towards foreigners the four alternatives imply radically different estimates of the social cost of carbon and hence the optimal intensity of climate policy

principles of stochastic dynamic optimization in resource management the continuous time case abstract a wide range of problems in economics agriculture and natural resource management have been analyzed using continuous time optimal control models where the state variables change over time in a stochastic manner using a firm level investment model and a model of environmental degradation this paper provides a concise introduction to continuous time stochastic control techniques the process used to derive the differential of a stochastic process is stressed and in turn is used to explain ito s lemma bellman s equation the hamilton jacobi equation the maximum principle and the expected dynamics of choice variables a basic extension of the dynamic duality literature is also provided where the hamilton jacobi equation is used to derive a stochastic and dynamic analogue of hotelling s lemma

convergence to symmetry in dynamic strategic models of r d the undiscounted case abstract will r d increase or decrease the asymmetry between firms over time we examine this issue in the context of a dynamic alternate move duopoly model of non cooperative r d the asymmetry we consider is with respect to the initial stocks of technological knowledge which provides one firm a greater potential for current and future profits in the product market utilizing a value loss process constructed from the optimality equation of dynamic programming we show that for the undiscounted case the asymmetry between the firms disappears over time we obtain this convergence to symmetry result by imparting a temporal character to r d through the notion that r d investment cannot be changed instantaneously by allowing research externalities complementarity or substitutability between own and appropriated r d and either increasing decreasing or constant returns to scale in the production of technical knowledge from own and rival r d

a note on endogenous risks and exhaustibility abstract this paper demonstrates that stock dependent risks do not qualify to be treated as a resonance problem of certainty equivalent exhaustibility it shows that this result holds without assuming risk aversion

the elementary economics of social dilemmas a social dilemma is in essence a prisoners dilemma in a continuous strategy space i discuss a number of social dilemmas that have caught my attention offer an elementary diagrammatic synthesis of them and discuss some of the economic insights that the diagrams capture including incentives for pre commitment finally i model pre commitment via delegation and link results to the literature on the evolution of preferences l economie elementaire des dilemmes sociaux un dilemme social est essentiellement un dilemme du prisonnier dans un espace continu de strategie l auteur discute d un certain nombre de dilemmes sociaux qui ont retenu son attention il en propose une synthese graphique elementaire et discute certaines des suggestions economiques qui decoulent de ces diagrammes comme par exemple les incitations a se pre engager finalement l auteur construit un modele de pre engagement par delegation et relie ses resultats a la litterature sur l evolution des references

quick job entry or long term human capital development the dynamic effects of alternative training schemes this study evaluates and compares the eectiveness of two alternative training schemes for the unemployed short job search oriented training and long human capital oriented training we investigate the impact dynamics of these pro grams considering both unemployment and employment duration our analysis uses a rich administrative longitudinal data set for germany where both programs were implemented at the same time our estimation strategy flexibly accounts for dy namic selection on observables and unobservables as well as heterogeneous treatment eects the results indicate that short term training schemes can be an eective tool to reduce unemployment in the long run in particular if participation occurs early during unemployment long term training schemes increase the average du ration of employment spells more strongly than short term training however they increase the expected unemployment duration if they are started early during un employment this negative short run impact of long term training is an important driver of its overall eectiveness

pricing and green level decisions of a green supply chain with governmental interventions under fuzzy uncertainties abstract environmental issues make green manufacturing become inevitable and fuzzy uncertainty prevails in supply chain management in order to further promote the development of green supply chain according to channel leadership scenario we develop three game models of a green supply chain with governmental interventions under fuzzy uncertainties of both manufacturing cost and consumer demand we study how prices green levels and expected profits are influenced by channel leadership and governmental interventions green level sensitivity and fuzzy degree of parameters are considered analytical results indicate that manufacturer stackelberg scenario is the inferior structure than other scenarios and retailer stackelberg scenario is superior to other scenarios for all players under the strong governmental interventions then when governmental interventions increase the green level will increase but the tendency of retail price depends on channel leadership governmental interventions are not always beneficial to the green supply chain and the manufacturer further although the government s subsidy is offered to the manufacturer the retailer benefits from it ultimately and further becomes the main puller of the development of green products in addition a relatively high green level floor for subsidy results in the manufacturer s first mover disadvantage

the economics of the greenhouse effect the recognition that economic activity is contributing to climatic change with attendant costs that may be of large magnitudes has set in motion a substantial research effort this paper seeks to review the contribution of economics to analysis of the greenhouse effect and to the policies and instruments suggested as means of mitigating its damage a brief overview of the causes and consequences of global warming is given and a number of energy economy forecasting models are examined as the costs of global warming depend upon the extent to which preventative and adaptive measures are undertaken the techniques available to evaluate these costs are surveyed we examine extant targets for greenhouse gas emissions reduction and explore the frameworks within which optimal policy targets can be designed the paper also considers the narrower question of minimized abatement costs and surveys the types of models used to estimate them the merits of alternative policy instruments are examined paying particular attention to the role that risk and uncertainty and the costs of monitoring and implementation of policy under conditions of imperfect information may play in the choice of instruments problems of international co operation in the development of abatement policy are examined and we consider the compensations across both nations and generations that are likely to be necessary conditions for effective action

the role of information sharing in cooperative research and development abstract this paper develops a model in which r d cooperation enables firms to increase the probability of discovering a new product by sharing information about research strategies and outcomes numerical computations of equilibrium show that cooperation tends to increase in the underlying probability of research success total surplus generally increases as more firms cooperate and cooperation in equilibrium never exceeds that which maximizes total surplus however when the probability of an innovation s success is relatively low no cooperation occurs nor will much be socially desired finally self imposed limits on membership in the cooperative entity tend to reduce total surplus

credible signals of the release of new versions i introduction many products are marketed some time after they have been developed for instance a new smartphone may be developed and tested well before it is available for purchase a new car might be prototyped and driven months before it comes to the market indeed a firm will often have several products concurrently in a development pipeline consumers may know a product is in that pipeline without knowing its progress towards the market because the outcome of such development and testing is not visible to outsiders the firm knows whether it can market a product before consumers do consumers are uninformed about when and if the new product will be marketed to them economists have long recognized that the present demand for durable goods depends on future prospects such as the future price or the introduction of an improved version 1 the existence of such an improved version is often the seller s private information if consumers anticipate a new version some will defer purchases until the new version is available and the seller will face low demand for the present version disclosing the new version is not in a monopoly seller s interest a seller whose good does not have a new version would also like to communicate that fact to consumers while a firm with a successful product innovation can credibly disclose the new version with relative ease a firm that has failed to develop a new product could have great difficulty convincing consumers that the product has no new version in such situations it is important to examine whether prices can inform consumers whether a new version will be marketed in the near future in a recent paper choi et al 2010 developed a model with a risky product development process in which reputation effects allow cheap talk announcements to signal successful product development to consumers an announcement induces consumers to delay or divert purchases to the announcer s coming product which increases the announcer s profit and can improve welfare 2 in their model the announcer and her non innovative rivals supply the original good competitively because of this an announcement does not reduce profit on the current version this paper will focus on markets where the seller has substantial market power before innovating so announcing a successful product development has a cost in terms of current revenue further because we attend to prices as signals this model may also apply to markets where a long run relationship between consumers and firms may not be sustainable another objective of this paper is to examine the welfare effects of mandatory disclosure a government policy mandating disclosure of any new version is an alternative means of informing consumers 3 as long as firms are not willing to lie to the government such a policy would credibly communicate whether a new version of a durable is coming mandatory disclosure would bring about full information as consumers are informed about any improved future version before observing the price of the current version in this paper we explore a two period model of a durable good monopoly in which consumers are initially uninformed about whether there will be a new version of the current good the monopoly seller is privately informed if he will be able to market an improved version in the second period in the first period consumers must decide whether to purchase the good now or wait for an upgraded version they may be able to infer from the price of the current version whether the seller will bring a new version to the market it is important to see first whether prices can serve as signals and second how welfare compares between any signaling outcome and a full information benchmark corresponding to mandatory disclosure we will show that there is a unique equilibrium supported by intuitive beliefs in this equilibrium the seller s private information about an improved version is completely revealed to consumers

r d cooperation in smes the direct effect and the moderating role of human capital abstractwe analyse the determinants of r d cooperation for smes in italy we introduce in the literature human capital as one of the main determinants of r d cooperation concentrating on its moder

a social cost of carbon for almost every country this paper uses imputed national climate change impact functions to estimate national social costs of carbon which are largest in poor countries with large populations the national social costs of carbon of faster growing economies are less sensitive to the pure rate of time preference and more sensitive to the rate of risk aversion the pattern of national social costs of carbon is not sensitive to the assumed impact function climate sensitivity and scenario although the global social cost of carbon is income convergence raises the national social costs of carbon of poorer countries and lowers them for richer countries both global and national social costs of carbon are most sensitive to the income elasticity of climate change impacts a parameter about which we know little

optimal consumption and the environment choosing between clean and dirty goods in this paper a model with heterogeneous consumption goods is presented consumers are assumed to choose between two different consumption goods characterized by a different impact on the environment this implies that in a decentralized economy government can sustain the social optimum by setting two pigouvian taxes one on production as a whole and the other on dirty consumption acting as an incentive in favour of clean consumption in accordance with the previous literature a trade off between a clean environment and economic activity evolves however this trade off is now mitigated by the additional taxation on polluting consumption which allows the control of pollution stock evolution through the substitution between clean and dirty commodities

retraining for the unemployed and the quality of the job match in germany retraining is an important measure in active labour market policy providing unemployed individuals with extensive vocational training using administrative data we show that retrainin

modelling imperfectly appropriable r d via spillovers abstract we provide an extensive comparison of the well known r d models of d aspremont jacquemin and kamien muller zang exposing full or partial conflict in key conclusions and policy prescriptions using a mix of formal and or intuitive criteria we argue that the first model is of questionable validity for large spillover values the latter being characterized by jointly increasing returns to scale in the r d process an argument leading to equivalence between the two r d processes but not to agreement on some key conclusions is exposited in conclusion the models emerge as fundamentally different although a unilateral shift in the cost function of the first leads to agreement in all equilibrium outcomes

equilibrium and optimal size of a research joint venture in an oligopoly with spillovers this paper analyzes a simple oligopoly model with information spillovers firms spend on r d to affect their costs of production the main finding is that depending on the magnitude of the spillover the market may not provide enough incentives for the optimum degree of cooperation to take place it is shown that the equilibrium size of a research joint venture is usually less than the optimum size which requires all firms to participate in the research joint venture the policy implications of this result are that there should be encouragement for firms competing in high technology industries to form industry wide cooperative agreements copyright 1995 by blackwell publishing ltd

an evaluation of the swedish system of active labour market programmes in the 1990s we investigate the presence of short and long term effects from joining a swedish labor market program vis a vis more intense job search in open unemployment overall the impact of the program system is found to have been mixed joining a program has increased employment rates among participants a result robust to a misclassification problem in the data on the other hand it has also allowed participants to remain significantly longer on unemployment benefits and more generally in the unemployment system this being particularly the case for those entitled individuals entering a program around the time of their unemployment benefits exhaustion

a dynamic adjustment model for u s agriculture 1948 79 abstract a multioutput model is developed within the adjustment cost framework to analyze the structure of dynamic adjustments in u s agriculture during the post war period an important feature of this model is that the econometric model is consistent with dynamic economic theory fluctuations in capital stocks variable inputs and outputs are explained by changing opportunity costs empirical results indicated that durable equipment farm produced durables and family labor exhibited significant rigidity in adjustment as a response to exogenous shocks surprisingly the hypothesis that real estate was a variable input could not be rejected the univariate flexible accelerator hypothesis which is widely maintained in most agricultural adjustment studies is inconsistent with the data

alternative approaches to evaluation in empirical microeconomics four alternative but related approaches to empirical evaluation of policy interventions are studied social experiments natural experiments matching methods and instrumental variables in each case the necessary assumptions and the data requirements are considered for estimation of a number of key parameters of interest these key parameters include the average treatment effect the treatment on the treated and the local average treatment effect some issues of implementation and interpretation are discussed drawing on the labour market programme evaluation literature

employment and earnings effects of awarding training vouchers in germany participation in intensive training programs for the unemployed in germany is allocated by awarding training vouchers using rich administrative data for all vouchers and actual program participation the authors provide first estimates of the short run and long run employment and earnings effects of receiving a training voucher award based on a selection on observables assumption the results imply that after the award voucher recipients experience long periods of lower labor market success compared to had they not received training vouchers small positive employment effects and no gains in earnings were observed four to seven years after the receipt of the voucher award in addition the findings suggest stronger positive effects both for all low skilled individuals who were awarded and redeemed a voucher and for low skilled and medium skilled individuals who chose to take degree courses than for higher skilled recipients

r d cooperation or competition abstract the economic literature provides empirical evidence of the existence of technological cartels such as research joint ventures or deliberate sharing of technological knowledge our aim is to answer to the questions i is the creation of technological cartels beneficial from a social welfare point of view and ii do the firms have private incentives to form such cartels we depart from the approach adopted in the literature by considering a dynamic model and allowing for the possibility that the firms are asymmetric the results show the importance of the degree of existing technological spillovers and stress the differences between the symmetric and asymmetric cases

environmental policy choice with an uncertain chance of irreversibility abstract an uncertain chance of irreversibility leads to lower levels of investment than in the reversible case if there is downward irreversibility higher levels of investment if there is upward irreversibility and a possible effect in either direction in the case of complete irreversibility in all of these situations there will be an effect on initial policy investments whenever there is a nonzero probability that the irreversibility constraint is binding the policy design is based on equating initial marginal costs to conditional marginal benefits over the states in which the initial policy scale decision will be the policy choice the maximum attainable policy value is convex with respect to the probability of irreversibility

symmetric research joint ventures cooperative substitutes and complements we introduce the concepts of cooperative substitutes and complements and use them to explain when all firms in a research joint venture will choose equal levels of r d we show that the second order conditions for a symmetric optimum take a particularly simple form ruling out both excessive cooperative substitutability and excessive cooperative complementarity and nesting conditions already derived in the literature finally we apply our results to the comparison between cooperative and non cooperative r d and show in an important special case that asymmetric outcomes are only optimal for a very limited range of parameter values

collusion and dynamic under investment in quality in a dynamic game of investment in product quality i investigate whether collusive underinvestment equilibria can be supported by the threat of escalation in investment outlays when there are no spillovers underinvestment equilibria exist even though by deviating a firm can gain a persistent strategic advantage when there are strong spillovers underinvestment equilibria fail to exist a weakening of patent protection can thus lead to more investment in equilibrium a nonfragmentation result is shown to hold in all free entry equilibria industry concentration is bounded away from zero no matter how large the market and despite the existence of underinvestment equilibria

targets for global climate policy an overview a survey of the economic impact of climate change and the marginal damage costs shows that carbon dioxide emissions are a negative externality the estimated pigou tax and its growth rate are too low to justify the climate policy targets set by political leaders a lower discount rate or greater concern for the global distribution of income would justify more stringent climate policy but would imply an overhaul of other public policies catastrophic risk justifies more stringent climate policy but only to a limited extent

endogenous timing in the presence of non monotonicities the aim of this paper is to generalize the endogenous timing game proposed by hamilton and slutsky games and economic behavior 1990 2 pp 29 46 by allowing the payoff or the marginal payoff of a player to become non monotonic with respect to the strategy of the opponent we propose a taxonomy of the subgame perfect nash equilibria based on the characteristics of the payoff functions proposed by eaton canadian journal of economics 2004 37 pp 805 29 we determine under which conditions of the initial payoff functions commitment has a social value and when the simultaneous move nash equilibrium is commitment robust and discuss its pareto efficiency

economic benefits of dolphins in the united states eastern tropical pacific purse seine tuna industry this paper provides a profit maximizing model with vessel level dolphin mortality limits for purse seiners harvesting tunas in the eastern tropical pacific ocean the model analytically derives the shadow price estimated economic value for dolphin mortality the fishing fleet size and the annual tuna harvest as functions of a few key fishing parameters the model also provides a statistical method to determine the accuracy of all needed parameter estimates the paper then applies the model to the year 1996 and the period from 1985 to 1987 the shadow price measures the economic value to the us tuna fleet of dolphins lost in the harvesting of tuna this value is essential when attempting to evaluate the economic benefits and costs to society of any action designed to reduce the mortality of dolphins in the harvesting of tuna in the eastern tropical pacific ocean

the nobel memorial prize for william d nordhaus william d nordhaus and paul m romer received the 2018 sveriges riksbank prize in economic sciences in memory of alfred nobel this paper surveys nordhaus contributions on integrating climate change into long run macroeconomic analysis for which he was recognized with this prize

a critical review of distance function based economic research on china s marginal abatement cost of carbon dioxide emissions abstract the last few years have witnessed a rapidly emerging literature estimating the marginal abatement cost or the shadow price of carbon dioxide co2 emissions in china using parametric or non parametric distance function approaches this is largely driven by the fact that china has become the world s largest carbon emitter and thus faced mounting domestic and international pressure to mitigate emissions there is an urgent policy need to model and predict the cost burdens of various mitigation scenarios consistent information about the marginal abatement cost of co2 emissions plays a crucial role in addressing this need however the existing literature has suffered from various issues that have severely weakened the scientific support that these studies could potentially provide for sound policy making this paper provides a thorough and critical review of this rapidly emerging literature and identifies important research directions that need the most attention from scholars

deforestation and agricultural productivity in the cote d ivoire an optimal control model is used to determine the optimal steady state forest stock in the cote d ivoire this stock is shown to increase with increases in the forestry returns relative to those in agriculture technological progress in agriculture and increases in the social discount rate serve to lower the optimal steady state forest stock based on an estimated aggregate yield function the optimal forest stock is shown to be most sensitive to changes in the social rate of discount assuming current 1985 technology deforestation appears socially optimal only for values of the discount rate greater than 8

pollution control under uncertainty and sustainability concern we analyze the implications of environmental policy on pollution in a stochastic framework with finite horizon and sustainability concern the social planner seeks to minimize the social environmental and economic costs associated with pollution we allow for the planner to attach different relative weights to the discounted and end of planning horizon costs in order to assess how sustainability concern might affect the optimal level of policy intervention we show that the optimal environmental policy increases with the degree of sustainability concern reducing thus the amount of pollution the society is forced to bear a calibration based on world textit co 2 data supports our conclusions further highlighting the importance of higher degrees of sustainability concern to achieve greener long run outcomes it also allows us to show that under a realistic model s parametrization the optimal environmental policy tends to rise with higher degrees of uncertainty in a precautionary manner

uncertainty spillovers and cooperative r d abstract this paper extends the literature on cooperative r d in an oligopoly with spillovers the model has three new features it introduces uncertainty focuses on spillover of innovation instead of effort spillover and offers a new definition of the research joint venture rjv the rjv is an arrangement to coordinate r d efforts and also to share the innovation firms form an rjv only if the innovation raises flow industry profit but independently of the speed of spillovers and the degree of uncertainty the model is robust when we allow for licensing the single lab endogenous spillovers and r d effort spillovers