The Optimal Investment Decision of the R&D Project in Coopetition

The successful research and development (R&D) project will bring huge profits for the enterprises, but there are some uncertainties in the R&D process which will influence the payoffs of the project, such as technical uncertainties and economic uncertainties. In order to cope with these uncertainties, some enterprises have to establish a research joint venture (RJV) in the R&D project investment, but they will still compete for more benefits after the success of project. For the optimal investment decision in cooperation, it needs to be very accurate in valuation of the R&D project before investment. There are four kinds of investment decisions for two enterprises in coopetition: leader, follower, investment together at once, or investment together after waiting. Depend on European option, this paper establishes the corresponding investment decision payoff model of the R&D project which can quantify the uncertainties and assess the timing and payoffs of the R&D project investment. After option game, the two enterprises could obtain their own optimal investment decision from the R&D project investment in coopetition.