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Strategic Choice of Partners: Research Joint Ventures and Market Power

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

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.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2617.

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Date of creation: Nov 2000
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Handle: RePEc:cpr:ceprdp:2617

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Related research

Keywords: Joint Ventures; Product Market Competition; Research And Development;

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References

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  17. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December.
  18. Hernán, Roberto & Marín Uribe, Pedro Luis & Siotis, Georges, 2000. "An Empirical Evaluation Of The Determinants Of Research Joint Venture Formation," CEPR Discussion Papers 2442, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. ATALLAH, Gamal, 2000. "Information Sharing and the Stability of Cooperation in Research Joint Ventures," Cahiers de recherche 2000-17, Universite de Montreal, Departement de sciences economiques.
  2. Kari Kemppainen, 2004. "Competition and regulation in European retail payment systems," Microeconomics 0404008, EconWPA.
  3. Ralph Siebert & Klaus Gugler, 2004. "Market Power versus Efficiency Effects of Mergers and Research Joint Ventures: Evidence from the Semiconductor Industry," NBER Working Papers 10323, National Bureau of Economic Research, Inc.

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