The objective is to extend Plasmans et al. (1998) and Lukatch en Plasmans (2000) both theoretically ands empirically. Theoretically, by introducing assymetry of firms and by deriving optimal static and dynamic innovation strategies and R&D related policy measures of national governments. Empirically, by performing five types of analyses: (I) present an overview over time of alle EU firms' patent (trademark) applications and patents (trademakks) granted by major patent and trademark offices (European, Japanese and American); (ii) study 'patent-to-patent citations' and 'patent-to-publication citations' as a possible efficient measure for knowledge spillovers; (iii) & (iv) estimation and testing of dynamic panel data models patent (trademark) appications, patents (trademarks) granted and the corresponding patent (trademark) intensities for 22 sectors in core EU countries (sample period 1989-2000); (v) if there are significant knowledge spillovers, the creation of e.g. a Research Joint Venture (RJV) may actually improve social welfare and be at the same time beneficial to the firms involved; we want to perfor a profound comparativeanalysis on the motives for starting RJV's, Joint Research and Development Agreements, Joint Research Pacts, and Research Corporations on the basis of an updated version of the MERIT-CATI database.