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Less Is More? Research Joint Ventures And Entry Deterrence

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  • Paul O'Sullivan

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    (Department of Economics Finance and Accounting, National University of Ireland, Maynooth)

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    Abstract

    This paper analyses the incentives of incumbent firms to form a first-mover RJV when faced with possible entry. If entry is accommodated, firms’ relative profits under R&D competition and RJV formation depend on R&D spillovers and firms’ R&D efficiency. RJV formation may make entry unprofitable if spillovers are sufficiently low. If entry is deterred, RJV formation may be more profitable. Similarly, whether accommodation or deterrence is more profitable under RJV formation depends on spillovers and the firms’ efficiency. How welfare is affected by RJV formation depends on whether output is exported or domestically consumed. There may be a role for active government policy to affect market outcomes.

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    Bibliographic Info

    Paper provided by Department of Economics, Finance and Accounting, National University of Ireland - Maynooth in its series Economics, Finance and Accounting Department Working Paper Series with number n245-13.pdf.

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    Length: 43 pages
    Date of creation: 2013
    Date of revision:
    Handle: RePEc:may:mayecw:n245-13.pdf

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    Postal: Maynooth, Co. Kildare
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    Web page: http://economics.nuim.ie
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