Working Paper BETA #2005-10

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Title : Open knowledge disclosure, incomplete information and collective innovations

Author(s) : Julien PENIN

Abstract : Why do firms decide sometimes to disclose widely part of their knowledge while they could have kept it secret ? We attempt to provide an original answer to this question by combining the literature in economics of innovation and in economics of incomplete information. We suggest that such practices of open knowledge disclosure can be deliberate strategies aiming at solving adverse selection problems that arise when firms try to find partners with whom to cooperate in R&D. Competent firms can sometimes think it a profitable strategy to disclose knowledge because this disclosure may allow them to display their differences with less competent firms, thus making it easier to start a profitable collaboration with other competent firms. We illustrate this intuition with the help of a signalling game under incomplete information.

Key-words : open knowledge disclosure, signalling, adverse selection, innovation network, R&D collaboration, col

JEL Classification : L0