Price Collusion and Stability of Research Partnerships
AbstractThis paper addresses two questions: 1) Does R&D cooperation facilitate price collusion; and 2) Why do R&D partnerships break up at high rates (20% in one estimate)? Innovation creates an interfirm cost asymmetry, which makes collusion difficult to sustain. The prospect of collusion ending with discovery makes collusion difficult to maintain before discovery. R&D cooperation averts this chain reaction and facilitates collusion before and after innovation. However, the firms' inability to monitor partners' R&D inputs constrains the extent of cooperation. To curb the opportunism, the partnership may dissolve itself with positive probability every time it fails to innovate.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Emory University (Atlanta) in its series Emory Economics with number 0415.
Date of creation: Oct 2004
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-02 (All new papers)
- NEP-COM-2004-12-02 (Industrial Competition)
- NEP-IND-2004-12-02 (Industrial Organization)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sue Mialon).
If references are entirely missing, you can add them using this form.