As technology becomes a critical factor in determining the competitiveness of firms, R＆D competitions are getting fierce than ever. But the high cost and risk involved in large scale R＆D project make R＆D cooperation more acceptable among competitive firms. In reality, there are many cooperative R＆D projects and strategic alliances like MCC, ESPRIT, EUREKA etc.
In recent years, there have been a lot of researches done on cooperative R＆D: explaining the prevalence of cooperative R＆D and its effects on social welfare. But most researches treat the crucial factors of cooperative R＆D, that is, spillover and complementarity, in an independent manner and consider only the Cournot type market configuration.
In this thesis, we model the cooperative R＆D as a two stage game between two symmetric firms. The major contribution of this thesis is to build a general model of cooperative R＆D, considering spillover, complementarity and the degree of market competition within a single framework and derive an implications to an appropriate R＆D policy. We find some interesting results that are contrary to the previous researches: first, the relative size of cooperative R＆D compared to the individual R＆D cannot be determined uniquely, but heavily depends on the interaction of spillover, complemen-tarity and the degree of competition. Second, as market becomes more competitive, the level of cooperative R＆D declines. Third, the complemen-tarity encourages the cooperative R＆D. Fourth, the level of subsidy necessary for attaining social optimum is proportional to the degree of market competition and spillover.
