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The Organization of Innovation: Incomplete Contracts and the Outsourcing Decision

By Thomas Jungbauer, Sean Nicholson, June Pan, Michael Waldman, and Lucy Xiaolu Wang

American Economic Journal: Microeconomics

Why do firms outsource research and development (R&D) for some products while conduct- ing R&D in-house for similar ones? An innovating firm risks cannibalizing its existing products. The more profitable these products, the more the firm wants to limit ...