Managerial incentives for technology transfer

This paper studies how a separation of ownership and management affects a firm's incentives to transfer knowledge about technology voluntarily and without payment to a rival in a Cournot duopoly. We consider a three-stage strategic delegation game, where two technologies are available; one with increasing returns to scale and the other with constant returns to scale. While the former is known to both firms, only the more advanced firm initially has access to the latter type of technology. This firm is assumed to be managerial, not only with respect to product market decisions, but also regarding the choice of whether or not to transfer technology to the rival firm. We consider the scope for, and limitations of, the use of strategic management and compare the results with those from traditional models that do not involve technology transfer and models that involve technology transfer, and no strategic management. The resulting technology choices are examined for their welfare implications, and finally we consider the transfer of technology when both firms are managerial.