Strategic Information Revelation and Revenue Sharing in an R&D Race with Learning Labs.

Inherent to most research projects is the fact that researchers learn about their project during the course of it. Research investments result in signals on development costs. This paper studies how this fact influences firms' investments, and how revenue sharing can correct inefficient behavior. We compare efficient R&D investments, equilibrium investments when signals are public, and equilibrium investments for private signals. Furthermore, we show which equilibrium is played when firms strategically reveal information. The paper focuses on the trade-off between incentives to acquire and reveal information, and incentives to develop the innovation.