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Mathematical Problems in Engineering
Volume 2015 (2015), Article ID 409286, 10 pages
Research Article

Stability Analysis of R&D Cooperation in a Supply Chain

1College of Business Administration, Hunan University, Changsha 410082, China
2College of Mathematics and Computer Science, Hunan Normal University, Changsha 410081, China

Received 18 May 2015; Accepted 13 August 2015

Academic Editor: Leonid Shaikhet

Copyright © 2015 Luyun Xu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


R&D outsourcing becomes the often-adopted strategy for firms to innovate. However, R&D cooperation often ends up with failure because of its inherent quality of instability. One of the main reasons for cooperation failure is the opportunistic behavior. As the R&D contract between firms is inherently incomplete, opportunistic behavior always cannot be avoided in the collaborative process. R&D cooperation has been divided into horizontal and vertical types. This paper utilizes game theory to study opportunistic behavior in the vertical R&D cooperation and analyzes the equilibrium of the cooperation. Based on the equilibrium and numerical results, it is found that the vertical R&D cooperation is inherently unstable, and the downstream firm is more likely to break the agreement. The level of knowledge spillovers and the cost of R&D efforts have different effects on firms’ payoffs. When the level of knowledge spillover is low or the cost of R&D efforts is high, mechanisms such as punishment for opportunism may be more effective to guarantee the stability of cooperation.