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Market Power and Incentives to Form Research Consortia

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  • Eliane Catilina

    ()

  • Robert Feinberg

Abstract

It is well known that instability is a limit to the formation of cartels, and that some synergies are required to give cartel members an advantage over outsiders. In this paper, we explore theoretically the linkage between cost-reduction alliances (like research joint ventures) and the formation of cartels. The former have negative external impacts on outsiders, while the latter have positive external effects on outside (independent) competitors. We find that when the decisions to join both are made simultaneously the cartel can be profitable and stable for a smaller number of members than previously found for cartel formation alone by Salant et al. (1983, Quarterly Journal of Economics 98, 185–199). This result follows both for open membership and exclusive membership rules, and suggests a possible anticompetitive impact of research joint ventures. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11151-006-0009-5
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 28 (2006)
Issue (Month): 2 (03)
Pages: 129-144

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Handle: RePEc:kap:revind:v:28:y:2006:i:2:p:129-144

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: cartel; group formation; RJV; D21; D43;

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Cited by:
  1. Tomaso Duso, & Enrico Pennings & Jo Seldeslachts, 2008. "On The Stability of Research Joint Ventures: Implications for Collusion," CIG Working Papers SP II 2008-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  2. Gianluca Femminis & Gianmaria Martini, 2008. "Extended RJV cooperation and social welfare," DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi itemq0852, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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