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COLLUSION AND RESEARCH JOINT VENTURES -super-

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  • KAZ MIYAGIWA

Abstract

I examine the question whether cooperation in R&D among firms producing similar products leads to product market collusion. Suppose that firms engage in a stochastic R&D race while maintaining the collusive equilibrium in a repeated-game framework. Innovation under non-cooperative R&D leads to an inter-firm asymmetry, destabilizing collusion in pre-discovery and post-discovery periods. Innovation sharing under cooperative R&D preserves the symmetry and also increases total profit, thereby facilitating collusion. However, welfare may increase with cooperative R&D. I also examine the condition for collusion under licensing and compare the results. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

Suggested Citation

  • Kaz Miyagiwa, 2009. "COLLUSION AND RESEARCH JOINT VENTURES -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 768-784, December.
  • Handle: RePEc:bla:jindec:v:57:y:2009:i:4:p:768-784
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    References listed on IDEAS

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    1. Abreu, Dilip, 1986. "Extremal equilibria of oligopolistic supergames," Journal of Economic Theory, Elsevier, vol. 39(1), pages 191-225, June.
    2. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-1306, December.
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    4. Jeanine Miklós-Thal, 2011. "Optimal collusion under cost asymmetry," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(1), pages 99-125, January.
    5. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 1-12.
    6. Yannis Caloghirou & Stavros Ioannides & Nicholas S. Vonortas, 2003. "Research Joint Ventures," Journal of Economic Surveys, Wiley Blackwell, vol. 17(4), pages 541-570, September.
    7. David R. Collie, 2006. "Collusion in Differentiated Duopolies with Quadratic Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 58(2), pages 151-159, April.
    8. Cabral, Luis M. B., 2000. "R&D cooperation and product market competition," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 1033-1047, October.
    9. Lambertini, Luca & Poddar, Sougata & Sasaki, Dan, 2002. "Research joint ventures, product differentiation, and price collusion," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 829-854, June.
    10. Verboven, Frank, 1997. "Collusive behavior with heterogeneous firms," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 121-136, May.
    11. Rothschild, R., 1999. "Cartel stability when costs are heterogeneous," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 717-734, July.
    12. Bloch, Francis & Markowitz, Paul, 1996. "Optimal disclosure delay in multistage R&D competition," International Journal of Industrial Organization, Elsevier, vol. 14(2), pages 159-179.
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    Citations

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    Cited by:

    1. Shastitko, Andrei, 2015. "A new look at the antimonopoly control of horizontal agreements," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 134-154.
    2. López, Ángel Luis & Vives, Xavier, 2016. "Cross-ownership, R&D Spillovers, and Antitrust Policy," CEPR Discussion Papers 11315, C.E.P.R. Discussion Papers.
    3. Motchenkova, E.I. & Rus, O., 2011. "Research joint ventures and price collusion: Joint analysis of the impact of R&D subsidies and antitrust fines," Serie Research Memoranda 0025, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    4. Tomaso Duso & Lars-Hendrik Röller & Jo Seldeslachts, 2014. "Collusion Through Joint R&D: An Empirical Assessment," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 349-370, May.
    5. Naoto Aoyama & Emilson C.D. Silva, 2017. "Asymmetric Innovation Agreements under Environmental Regulation," CESifo Working Paper Series 6782, CESifo Group Munich.
    6. repec:eee:indorg:v:56:y:2018:i:c:p:78-106 is not listed on IDEAS
    7. Jeroen Hinloopen & Grega Smrkolj & Florian Wagener, 2016. "R&D Cooperatives and Market Collusion: A Global Dynamic Approach," Tinbergen Institute Discussion Papers 16-048/II, Tinbergen Institute.
    8. Aguiar, Luis & Gagnepain, Philippe, 2017. "European cooperative R&D and firm performance: Evidence based on funding differences in key actions," International Journal of Industrial Organization, Elsevier, vol. 53(C), pages 1-31.
    9. repec:spr:joptap:v:174:y:2017:i:2:d:10.1007_s10957-017-1133-0 is not listed on IDEAS
    10. Levy, Nadav, 2012. "Technology sharing and tacit collusion," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 204-216.
    11. Ángel L. López & Xavier Vives, 2016. "Overlapping Ownership, R&D Spillovers, and Antitrust Policy," CESifo Working Paper Series 5935, CESifo Group Munich.

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