Contract Theory: Impact on Biopharmaceutical Alliance Structure and Performance
In this paper, we seek to understand what drives alliance structure; the choice between collaborative alliances where both parties exert joint efforts and sequential alliances where, for the most part, the partner takes over going forward. We review and test the implications of contract theory on the choice at hand by analyzing a dataset of over 2000 biopharmaceutical alliances. Last but not least, we find that aligning the choice… [Read more here] [See related online tool here]
Research and development (R&D) collaborations, common in high-tech industries, are challenging to manage due to technical and market risks as well as incentive problems. We investigate how control rights, options, payment terms and timing allow the innovator to capture maximum value from its R&D collaborations with a marketer. Our study reveals a counterintuitive result; the innovator may… [Read more here]
The Role of Equity, Royalty and Fixed Fees in Technology Licensing to University Spin-Offs
Management Science, 2015, 61(6) 1323–1343. Joint work with Nicos Savva
We develop a model based on asymmetric information (adverse selection) that provides a rational explanation for the persistent use of royalties alongside equity in university technology transfer. The model shows how royalties, through their value-destroying distortions, can act as a screening tool that allows a less informed principal… [Read more here]
Capacity Allocation for a Green Farm: Impact of locally-aware consumers
Most farmland in the United States are leased to farmers by landlords. Rental agreements between landlords and farmers often include a crop-sharing term. Consumers are willing to pay a premium for green produce and some even more for locally sourced green produce. However, yields for green farming are typically lower than conventional farming. We model the strategic interaction between a farmer and a landlord, the capacity allocation decision of the farm across conventional and green produce, and the decision of the farm to allocate its green produce across a global market and a local market. We find that the optimal set of decisions and the eventual green yield attained are a function of factors such as the green premium, price sensitivity of consumers at the local market and the contract signed with the consultant. Interestingly, our model shows that the presence of a green-aware group of local consumers may have a negative impact on green output.