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Free Riding

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9/11/2016 3:13:21 PM
Posted: 1 year ago
At 9/11/2016 3:04:42 PM, ecor wrote:
Do firms face when sb else is free-riding on their efforts?

or better asked:

I read a lot and find different contradictions:

Once its said that firms do not take spillovers into account for their own RandD level - just when they are in cooperation
how come then, that firms which compete, invest less in RandD when the gain from Spillovers and free-ride on other efforts?

So the solution might be, to group firms into joint research which shall lead( if no collusive behavior is there) to the highest Consumer and producer surplus.
So most desirable from the point of social welfare.

On the other side (article) it is said that RandD agreements lead to less investment in RandD. So what is true now?

And last but not least: Do firms face that their RandD investment leads to spillovers, so that others' free ride? Do they take actions and hence reduce their investments then?

Thanks in advance!