Economic theory

Research and development activities conducted at universities and firms fuel economic growth

and play a key role in the process of innovation. Specifically, prior research has investigated the

widespread university-to-firm research development path and concluded that universities are

better suited for early stage of research while firms are better positioned for later stages. This

thesis aims to present a novel explanation for the pervasive university-to-firm research

development path. The model developed uses game theory to visualize and analyze interactions

between a firm and university under different strategies. The results reveal that as academic

research signals knowledge it helps attract tuition paying students. Generating these tuition

revenues is facilitated by university research discoveries, which, once published, a firm can build

upon to make new innovative products. In an environment of weak intellectual property rights,

moreover, the university-to-firm research development path enables firms to bypass the hefty

costs that are involved in basic research activities. The model also provides a range of solution

scenarios where a university and firm may find it viable to initiate a research line.

Author Keywords: Game theory, Intellectual property rights, Nash equilibrium, Research and development, University to-firm research path