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Sustaining Cooperation with Joint Ventures

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  • Thomas W. Ross

Abstract

Antitrust agencies and courts have expressed concerns that joint ventures and strategic alliances between firms that compete in other markets might serve to reduce the vigor of their competition. This article explores a mechanism through which a joint venture between two (or more) firms in one market can serve to facilitate collusion in another market--even one unconnected vertically or horizontally by costs or demand. In the models studied here, play in one market has the effect of altering players' beliefs about their rivals' play in the second market. A joint venture in one market may provide a credible punishment mechanism for firms colluding in another market. The joint venture may also provide a vehicle for the transmission, between players, of information in a way that helps cooperative types find each other and collude in other markets. (JEL L12, L41, K21) The Author 2007. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/jleo/ewm051
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Bibliographic Info

Article provided by Oxford University Press in its journal The Journal of Law, Economics, & Organization.

Volume (Year): 25 (2009)
Issue (Month): 1 (May)
Pages: 31-54

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Handle: RePEc:oup:jleorg:v:25:y:2009:i:1:p:31-54

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Cited by:
  1. Duso, Tomaso & Röller, Lars-Hendrik & Seldeslachts, Jo, 2012. "Collusion through joint R&D: An empirical assessment," DICE Discussion Papers 79, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  2. Tomaso Duso & Lars-Hendrik Roeller & Jo Seldeslachts, 2010. "Collusion through Joint R&D: An Empirical Assessment," Tinbergen Institute Discussion Papers 10-112/1, Tinbergen Institute.
  3. 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).
  4. Christin, Clémence, 2011. "Entry deterrence through cooperative R&D over-investment," DICE Discussion Papers 38, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  5. 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).
  6. Andreas Nicklisch, 2012. "Does collusive advertising facilitate collusive pricing? Evidence from experimental duopolies," European Journal of Law and Economics, Springer, vol. 34(3), pages 515-532, December.

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