Licensing and the Sharing of Knowle in Research Joint Ventures*

We consider a three-stage model of research and development (R&D) to capture some key elements of research joint ventures (RJVs). In rhe last of the three stages, firms compete in the product market. In the second stage, the firms simultaneously choose unobservable R & D levels. In the first stage, the firms can share some or all of their knowledge with other iirrns in the RJV. We examine the ability of two simple licensing mechanisms to ensure both efficient sharing of knowledge and efficient R&D effort levels. Journal of Economic Literrzture Classification Numbers: D21, D82, L20. G 1992 Academic press, IX.