Sudipto Bhattacharya, L-A Gérard-Varet and Claude d'Aspremont

Published 1996

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We consider the problem of bargaining over the disclosure of interim research knowledge, between two participants in a R & D race or contest, for an ultimate, patentable invention. Licensing fee schedules, as functions of the 'amount of knowledge' disclosed by the leading to the lagging agent, are considered. Conventional results, on delays in bargaining and surplus sharing in private goods environments, are sharply modified by the public good nature of innovation, and by the fundamental nonconcavity of payoffs with respect to disclosure of interim research knowledge.