Understanding When Universities and Firms Form RJVs: The Importance of Intellectual Property Protection.∗

During the past 20 years we have witnessed an increase in joint research between universities and Þrms. Nevertheless, this increase, which is largely attributed to the Bayh-Dole Act, has fallen short of expectations. This paper examines the conditions under which a Þrm will Þnd it proÞtable to form an RJV with a university. My results indicate that Þrms, which work on new-technologies, are more likely to form such partnerships. The reason is that these Þrms optimally choose minimal IP protection (lower proÞts), in effect sharing their innovation, so as to beneÞt from increased knowledge spillovers. Thereby, the opportunity cost of joining an RJV for Þrms (and universities) working on mature technologies is greater, making such partners unlikely candidates for RJVs.