The Optimal Risk Choice of Cooperative and Noncooperative R&D With Cross-Ownership
Bibliographic Data
| ID | 2810181 |
|---|---|
| Authors | Dongdong Li (0000-0001-9000-7158, School of Public Policy and Administration Northwestern Polytechnical University Xi'an Shaanxi China), Feiran Xu (School of Management Northwestern Polytechnical University Xi'an Shaanxi China), Fang Xu (0000-0001-8201-1595, Northwestern Polytechnical University), Chenxuan Shang (0000-0002-5350-841X, Institute of Energy, Environment and Economy Tsinghua University Beijing China, corresponding author) |
| Year | 2025 |
| Volume | 85 |
| Issue | 1 |
| Pages | 149-162 |
| Publication date | 2025-08-12 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | American Journal of Economics and Sociology (JOURNAL) |
| Journal identifiers | ISSN: 0002-9246 • E-ISSN: 1536-7150 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/ajes.70007 |
| OpenAlex | W4413128875 |
| Language | EN |
| References cited | 31 |
This paper develops a duopoly model to examine firms' optimal R&D risk choices under cooperative and non-cooperative R&D with cross-ownership. We find that firms adopt higher R&D risks in cooperative settings than in non-cooperative ones. Moreover, equilibrium R&D risks increase with cross-ownership, and a firm assumes higher risk when it holds a smaller equity stake in its competitor. Our results also reveal that the socially optimal R&D risk exceeds the private optimum. Under cooperative R&D, this risk gap widens as cross-ownership rises, whereas in non-cooperative R&D, its trend depends on product substitutability. Extending the model to unilateral ownership, we show that the firm partially owned by its competitor takes on higher R&D risk than the owning firm, though both assume lower risk compared to cross-ownership. Finally, we demonstrate that R&D risk is higher under Bertrand competition than under Cournot competition. This study contributes to the literature by highlighting the role of ownership structure in shaping firms' risk-taking behaviors in R&D and offering new insights into the trade-off between cooperation and competition in innovation
Business · Economics · Microeconomics · Capital Investment and Risk Analysis · Chemistry · Merger and Competition Analysis · Supply Chain and Inventory Management
| Citation velocity | historical |
|---|---|
| Highly cited | No |