Cooperation in the Classroom: Experimenting with R&D Cooperatives

Abstract

The authors describe a classroom experiment that illustrates the research and development investment incentives facing firms when technological spillovers are present. The game involves two stages in which student "sellers" first make investment decisions and then production decisions. The classroom game can be used to motivate discussions of research joint ventures, the free-rider problem, collusion, and antitrust policy regarding research and development. [PUBLICATION ABSTRACT]