The Unilateral Incentives for Technology Transfers: Predation by Proxy (and Deterrence)
AbstractJoint production between rival firms often entails knowledge transfers without direct compensation, leaving the question as to why more efficient firms would give their rivals such an advantage. We find that such transfers are credible mechanisms to make the market more competitive so as to deter entry or force exit. We determine that with free entry such transfers are profitable and further it is optimal to predate or deter every firm possible so that a market with many firms can become a duopoly. While consumers are harmed by such action, production efficiency increases sufficient to cause welfare to increase.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 677.
Date of creation: 29 Sep 2007
Date of revision: 19 Jun 2008
Publication status: published, International Journal of Industrial Organization 27, 379-389, 2009
Note: Previously circulated as "The Unilateral Incentives for Technology Transfers: Predation by Proxy"
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Predation; Technology Transfers;
Find related papers by JEL classification:
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-06 (All new papers)
- NEP-BEC-2007-10-06 (Business Economics)
- NEP-COM-2007-10-06 (Industrial Competition)
- NEP-MIC-2007-10-06 (Microeconomics)
- NEP-TID-2007-10-06 (Technology & Industrial Dynamics)
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