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Do research joint ventures serve a collusive function?

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  • Michelle S. Goeree
  • Eric Helland

Abstract

Every 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 Info

Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 448.

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Date of creation: Sep 2009
Date of revision: Jul 2012
Handle: RePEc:zur:iewwpx:448

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Keywords: Research and development; research joint ventures; antitrust policy; collusion;

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Cited by:
  1. Duso, Tomaso & Röller, Lars-Hendrik & Seldeslachts, Jo, 2012. "Collusion through joint R&D: An empirical assessment," DICE Discussion Papers 79, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  2. Fosfuri, A. & Helmers, C. & Roux, C., 2012. "Are joint patents collusive? Evidence from the US and Europe," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2012-035, Tilburg University, Tilburg Law and Economic Center.
  3. Tannista Banerjee & Ralph Siebert, 2014. "The Impact of R&D Cooperations on Drug Variety Offered on the Market. Evidence from the Pharmaceutical Industry," CESifo Working Paper Series 4567, CESifo Group Munich.
  4. Hinloopen, J. & Smrkolj, G. & Wagener, F.O.O., 2013. "In Defense of Trusts: R&D Cooperation in Global Perspective," CeNDEF Working Papers 13-05, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  5. Erika Raquel Badillo & Rosina Moreno, 2014. "“Are R&D collaborative agreements persistent at the firm level? Empirical evidence for the Spanish case”," AQR Working Papers, University of Barcelona, Regional Quantitative Analysis Group 201405, University of Barcelona, Regional Quantitative Analysis Group, revised Mar 2014.
  6. König, Michael & Liu, Xiaodong & Zenou, Yves, 2014. "R&D Networks: Theory, Empirics and Policy Implications," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9872, C.E.P.R. Discussion Papers.
  7. Tannista Banerjee & Stephen Martin, 2013. "Pharmaceutical regulation and innovative performance: a decision-theoretic model," Auburn Economics Working Paper Series, Department of Economics, Auburn University auwp2013-21, Department of Economics, Auburn University.
  8. Gianluca Femminis & Gianmaria Martini, 2008. "Extended RJV cooperation and social welfare," DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE) itemq0852, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  9. Ralph Siebert, 2013. "Are Ex Ante and Ex Post Licensing Agreements Useful Instruments to Lessen Uncertainty in R&D?," CESifo Working Paper Series 4535, CESifo Group Munich.
  10. Erika Raquel Badillo & Rosina Moreno, 2014. "“Are R&D collaborative agreements persistent at the firm level? Empirical evidence for the Spanish case”," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 201410, University of Barcelona, Research Institute of Applied Economics, revised Mar 2014.

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