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Market Power and Incentives to Form Research Consortia

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  • Eliane Catilina

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  • Robert Feinberg

Abstract

It is well known that instability is a limit to the formation of cartels, and that some synergies are required to give cartel members an advantage over outsiders. In this paper, we explore theoretically the linkage between cost-reduction alliances (like research joint ventures) and the formation of cartels. The former have negative external impacts on outsiders, while the latter have positive external effects on outside (independent) competitors. We find that when the decisions to join both are made simultaneously the cartel can be profitable and stable for a smaller number of members than previously found for cartel formation alone by Salant et al. (1983, Quarterly Journal of Economics 98, 185–199). This result follows both for open membership and exclusive membership rules, and suggests a possible anticompetitive impact of research joint ventures. Copyright Springer 2006

Suggested Citation

  • Eliane Catilina & Robert Feinberg, 2006. "Market Power and Incentives to Form Research Consortia," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(2), pages 129-144, March.
  • Handle: RePEc:kap:revind:v:28:y:2006:i:2:p:129-144 DOI: 10.1007/s11151-006-0009-5
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    References listed on IDEAS

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    Cited by:

    1. J. Seldeslachts & T. Duso & E. Pennings, 2012. "On the Stability of Research Joint Ventures: Implications for Collusion," Review of Business and Economic Literature, Intersentia, vol. 57(1), pages 98-109, March.
    2. Gianluca Femminis & Gianmaria Martini, 2008. "Extended RJV cooperation and social welfare," DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi itemq0852, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    3. Robert M. Feinberg & Hyunchul Kim & Minsoo Park, 2016. "The Determinants of Cartel Duration in Korea," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(4), pages 433-448, June.

    More about this item

    Keywords

    cartel; group formation; RJV; D21; D43;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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