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January 2012, 8(1): 127-139. doi: 10.3934/jimo.2012.8.127
Optimal assignment of principalship and residual distribution for cooperative R&D
Chang-Feng Wang 1, and Yan Han 2,
School of Management Science & Engineering, Shandong Normal University, Jinan 250014, China
School of Management, Shandong Jiaotong University, Jinan 250023, China
This paper develops a general equilibrium model with two firms in cooperative R&D projects to investigate the optimal assignment of principalship and residual distribution strategies. We make a distinction between cooperative R&D effort and monitoring effort. When it is costly to sign contracts on R&D efforts under complete information, it may be optimal to let one firm purchase the rights to monitor and to direct, and claim full residual. Principalship is the purchase of these rights. These rights are limited residual rights of control over R&D actions. In the benchmark case of incomplete information, we have also explored how the optimal assignment of principalship distribution in cooperative R&D and partnership depends on the interaction between each member's importance in cooperative R&D, the effectiveness of monitoring and the degree of R&D teamwork.
Keywords: incomplete information., cooperative R&D, residual distribution, Principalship.
Mathematics Subject Classification: Primary: 91A05, 91A10; Secondary: 91F9.
Citation: Chang-Feng Wang, Yan Han. Optimal assignment of principalship and residual distribution for cooperative R&D. Journal of Industrial & Management Optimization, 2012, 8 (1) : 127-139. doi: 10.3934/jimo.2012.8.127
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Chang-Feng Wang Yan Han