THE MARKET PLACE FOR R&D OUTCOMES: ITS FUNCTION AND SIGNIFICANCE IN THE INNOVATION PROCESS (RESEARCH AND DEVELOPMENT, INDUSTRIAL ORGANIZATION, TRANSACTIONS COST, TECHNOLOGICAL)

The market place for research and development (R&D) outcomes, an important economic institution in the innovation process, is examined in this study. R&D outcomes, or the goods being exchanged in the market place, are bundles of property rights associated with the output of whatever R&D activities have already been completed during the course of R&D efforts. Such efforts are directed toward producing or lead to the production of technological innovations.;These objectives are achieved by first developing a typology of transactions or categories of exchange in the market place. Economic reasoning is applied to the transaction event--the unit of analysis--by analyzing the supply of and investment in R&D outcomes in a dynamic-strategic behavior framework. The framework is then utilized to analyze why particular categories of exchange either occur or are inhibited under specific sets of circumstances. Strategic behavior provides two self-correcting mechanisms in the market place under conditions leading to market failure: the ability to utilize different categories of exchange and the existence of agents to facilitate exchange. Next, three empirical case studies of activities involving or related to exchange in the market place further illustrate applications of the theory. Finally, the roles of government and private business policy are related to conditions in which there is market failure caused by high transactions costs.;The study has three objectives: (1) to develop a theory of the market place for R&D outcomes and demonstrate that it has significant utility in explaining the economics of technological innovation; (2) to illustrate how application of the theory helps explain the behavior of actors in the innovation process as they engage in a variety of innovative activities and as such activities occur under different situations; and (3) to utilize the theory to explain the role of government policy in the innovation process.