Structuring Public–Private Research Partnerships for Success

Structuring Public–Private Research Partnerships for Success

Empowering University Partners

Gordon Rausser, Holly Amedon and Reid Stevens

As funding for universities and governmental research units has declined, these institutions have turned to the private sector to augment their research and development budgets. This book presents a framework for structuring public-private research partnerships that protect both these institutions’ academic freedom and the private firm’s corporate interests. This formulation is developed using insights originating from the incomplete contracting and collective decision making literatures. The book presents a number of template designs for a variety of research partnerships.

Chapter 10: The structural setting: The stages of research and development

Gordon Rausser, Holly Amedon and Reid Stevens

Subjects: economics and finance, financial economics and regulation, public finance, public sector economics, politics and public policy, public policy


We develop a four-stage process for forming and managing a public–private research partnership. Central to this process is the concept of the control premium, or the right to make decisions when unanticipated events occur. The four-stage process considers setting the bargaining space, negotiating the contract for control at both the front-end and back-end, collective decision making through bargaining, and responding to shocks. The three characteristics critical to implementing research partnerships are size, stage, and assignment of control rights. The optimal assignment of control rights will vary by PPRP and is a function of the type of good produced by the partnership. We review the stages and characteristics in light of case studies, where primary lessons are distilled, including actively engaging potential partners, academic freedom, allocation of control rights to the research agenda selection committees, publication delay and option to end publication delay, and intellectual property and licensing options.

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