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Collusion Through Joint R&D: An Empirical Assessment

  • Tomaso Duso

    (Duesseldorf Institute for Competition Economics, Heinrich-Heine University)

  • Lars-Hendrik Röller

    (European School of Management and Technology)

  • Jo Seldeslachts

    (University of Amsterdam and KU Leuven)

This paper tests whether upstream R&D cooperation leads to downstream collusion. We show that a sufficient condition for identifying collusive behavior is a decline in the market share of firms participating in research joint ventures (RJVs). Using information from the U.S. National Cooperation Research Act, we estimate a market share equation correcting for the endogeneity of RJV participation and R&D expenditures. We find robust evidence that large networks between direct competitors, created through firms being members in several RJVs at the same time, are conducive to collusive outcomes in the product market that reduce consumer welfare. By contrast, RJVs among noncompetitors are efficiency enhancing. © 2014 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00367
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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 96 (2014)
Issue (Month): 2 (May)
Pages: 349-370

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Handle: RePEc:tpr:restat:v:96:y:2014:i:2:p:349-370
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