Collaborative Innovation (or Not?!) when Product Performance is Critical

Research and development (R&D) collaborations are horizontal agreements among firms to join forces in their inventive activities. As the context of recent COVID-19 global pandemic, such often promoted with an argument increased R&D productivity. In numerous contexts, especially when marginal production costs low, as for medications or software, consumers' surplus depends critically on best-performing product available market, for-all else equal-this will tend take a dominant position. Using simple two-stage model innovation subsequent commercialization market heterogeneous consumers, we show that noncollaborative patent race protection (for best product) provides strong incentives, leading better performing products than regime research without collaborative (with profit sharing). © 2021 IEEE Computer Society. All rights reserved.