Game Theory and the Logic of R&D Strategic Alliances

According to economists game theory is the study of strategy, or study of actions of agents whose outcome depends on the actions of other agents. The objective of this paper is to outline the major contributions of game theory to an examination of the individual rationality of firms that causes them to seek and implement R&D alliances. We examine the answers proposed by the recent literature (since 1985) to two questions of importance: under what circumstances should a firm prefer an R&D strategic alliance to in-house development? how should an R&D strategic alliance be successfully implemented?