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Strategic Choice of Partners: Research Joint Ventures and Market Power

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  • Tombak, Mihkel
  • Röller, Lars-Hendrik
  • Siebert, Ralph

Abstract

The literature on research joint ventures (RJVs) has emphasized internalizing spillovers and cost-sharing as motives for RJV formation. In this paper we develop an additional explanation: the incentive to exclude rivals in order to gain market power. We illustrate this effect in a simple model of RJV formation with asymmetric firms. We then test our hypothesis by estimating an endogeneous switching model using data from the US National Cooperative Research Act. The empirical findings support our Hypothesis that RJVs can be used as an instrument by which firms leverage their market power in the product market.

Suggested Citation

  • Tombak, Mihkel & Röller, Lars-Hendrik & Siebert, Ralph, 2000. "Strategic Choice of Partners: Research Joint Ventures and Market Power," CEPR Discussion Papers 2617, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2617
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    Cited by:

    1. Gamal Atallah, 2003. "Information sharing and the stability of cooperation in research joint ventures," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(6), pages 531-554.
    2. Kemppainen, Kari, 2003. "Competition and regulation in European retail payment systems," Bank of Finland Research Discussion Papers 16/2003, Bank of Finland.
    3. Klaus Gugler & Ralph Siebert, 2007. "Market Power versus Efficiency Effects of Mergers and Research Joint Ventures: Evidence from the Semiconductor Industry," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 645-659, November.
    4. repec:zbw:bofrdp:2003_016 is not listed on IDEAS
    5. Kari Kemppainen, 2004. "Competition and regulation in European retail payment systems," Microeconomics 0404008, University Library of Munich, Germany.
    6. Kemppainen, Kari, 2003. "Competition and regulation in European retail payment systems," Research Discussion Papers 16/2003, Bank of Finland.

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    More about this item

    Keywords

    Research and development; Joint ventures; Product market competition;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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