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Market shares, R&D agreements, and the EU block exemption

Author

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  • Richard Ruble

    (EM - EMLyon Business School)

  • Bruno Versaevel

Abstract

Regulation (EC) No 1217/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of R&D agreements exempts horizontal R&D agreements from antitrust concerns when the combined market share of participants is low enough. We examine the theoretical basis for this criterion by extending existing models so that a subset of firms innovates and participates in an R&D cooperation agreement. We show that the incentive to increase innovation depends on a complex set of effects. We identify one, the outsider effect, that can lead firms to increase R&D under cooperation precisely when their combined market share is high. In a general model in which all firms innovate, we also find that R&D agreements can be more beneficial at higher market shares. We argue that existing theory therefore does not support limiting the exemption to low market shares.

Suggested Citation

  • Richard Ruble & Bruno Versaevel, 2014. "Market shares, R&D agreements, and the EU block exemption," Post-Print hal-02313022, HAL.
  • Handle: RePEc:hal:journl:hal-02313022
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    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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