Do research joint ventures serve a collusive function?
AbstractEvery year thousands of firms are engaged in research joint ventures (RJV), where all knowledge gained through R&D is shared among members. Most of the empirical literature assumes members are non-cooperative in the product market. But many RJV members are rivals leaving open the possibility that firms may form RJVs to facilitate collusion. We examine this by exploiting variation in RJV formation generated by a policy change that affects the collusive benefits but not the research synergies associated with a RJV. We use data on RJVs formed between 1986 and 2001 together with firm-level information from Compustat to estimate a RJV participation equation. After correcting for the endogeneity of R&D and controlling for RJV characteristics and firm attributes, we find the decision to join is impacted by the policy change. We also find the magnitude is significant: the policy change resulted in an average drop in the probability of joining a RJV of 34% among telecommunications firms, 33% among computer and semiconductor manufacturers, and 27% among petroleum refining firms. Our results are consistent with research joint ventures serving a collusive function.
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Bibliographic InfoPaper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 448.
Date of creation: Sep 2009
Date of revision: Jul 2012
Research and development; research joint ventures; antitrust policy; collusion;
Find related papers by JEL classification:
- L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
- L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-10 (All new papers)
- NEP-COM-2009-10-10 (Industrial Competition)
- NEP-INO-2009-10-10 (Innovation)
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- Tannista Banerjee & Stephen Martin, 2013. "Pharmaceutical regulation and innovative performance: a decision-theoretic model," Auburn Economics Working Paper Series auwp2013-21, Department of Economics, Auburn University.
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Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
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