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Strategic Choice of Partners: Research Joint Ventures and Market Power

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Author Info
Röller, Lars-Hendrik
Siebert, Ralph
Tombak, Mihkel

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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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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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Find related papers by JEL classification:
L0 - Industrial Organization - - General
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General

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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gamal Atallah, 2003. "Information sharing and the stability of cooperation in research joint ventures," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 12(6), pages 531-554, January. [Downloadable!] (restricted)
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  2. Kari Kemppainen, 2004. "Competition and regulation in European retail payment systems," Microeconomics 0404008, EconWPA. [Downloadable!]
  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. [Downloadable!] (restricted)
    Other versions:
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