Technological innovation strategy of firm with spillover

This paper analyses the effects of spillover on optimum size of the R&D alliance firm and non-alliance firm, and the technological innovation strategy of non-alliance firm with spillover. The result shows that spillover can increase the optimum size of non-alliance firm, and externalizes profit of alliance firm to the social welfare. The more is the spillover effects, the less are the fixed-fee licensing payments that the non-alliance firm want to pay, and the stronger is licensing incentive of alliance firm. The extent of unit cost that the new technology reduced is also an important influencing factor of the technology innovation strategy of non-alliance firm. If the extent is little enough, the licensing agreement will be reached, and the non-alliance firm can realize technological innovation through paying the fixed transfer fee to alliance firm.