Experimental Economics

, Volume 20, Issue 3, pp 574–600 | Cite as

Asymmetric firms, technology sharing and R&D investment

  • Matthew R. Roelofs
  • Stein E. Østbye
  • Eirik E. Heen
Original Paper
First Online:
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Revised:
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  • 335 Downloads

Abstract

We use a combination of theory and experiment to study the incentives for firms to share knowledge when they engage in research and development (R&D) in an uncertain environment. We consider both symmetric and asymmetric starting points with regards to the amount of initial knowledge firms have before conducting R&D and look at how differences in starting positions affect the willingness of firms to share knowledge. We investigate when and if firms find R&D cooperation beneficial and how investment in R&D is affected by the outcome of the sharing decisions. The experimental evidence shows that overall subjects tend to behave consistently with theoretical predictions for the sharing of knowledge, although leaders who are not compensated by a side payment from laggards are more willing to share than predicted by the theory, and leaders who are compensated are less willing. The data on investment suggests less investment with sharing than without, consistent with theory. Compared to exact numerical predictions, there is overinvestment or underinvestment except for symmetric firms under no sharing. All cases of overinvestment and underinvestment, regardless of sharing or not and regardless of starting positions, are well explained by smoothed-out best (quantal) responses.

Keywords

Research and development Cooperation Investment Leader and laggard 

JEL Classification

C72 C92 D83 L14 O32 
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Notes

Acknowledgements

We would like to thank the editor of this journal and two anonymous referees for their constructive suggestions that greatly improved the paper. We would also like to thank Sigrid Suetens, Iván Barreda Tarrazona, Derek Clark and John Krieg, along with conference and seminar participants at Tilburg University, Universitat Jaume 1, the Nordic Behavioral and Experimental Economics Conference in Helsinki and the Economic Science Association meeting in Tokyo for helpful comments. The experiments in this paper were funded by the School of Business and Economics at UiT—The Arctic University of Norway and supported by equipment and staff at Western Washington University.

Supplementary material

10683_2016_9500_MOESM1_ESM.pdf (352 kb)
Supplementary material 1 (pdf 352 KB)

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Copyright information

© Economic Science Association 2016

Authors and Affiliations

  • Matthew R. Roelofs
    • 1
  • Stein E. Østbye
    • 2
  • Eirik E. Heen
    • 2
  1. 1.College of Business and EconomicsWestern Washington UniversityBellinghamUSA
  2. 2.School of Business and EconomicsUiT The Arctic University of NorwayTromsøNorway

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