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Product market objectives and the formation of research joint ventures


  • Patrick Greenlee

    (Antitrust Division, US Department of Justice, Washington, DC, USA)

  • Bruno Cassiman

    (Department of Economics and Business, Universitat Pompeu Fabra, Barcelona, Spain)


In this paper we extend the existing literature on research and development (R&D) investments and research joint ventures (RJVs) in two important ways. First, we analyze and compare the case where firms collude in the product market to the benchmark case of competition in the output market. Second, we allow firms to form coalitions endogenously as a separate stage in the game. We develop profit functions that depend on the partition of firms into joint ventures and the nature of product competition between venture partners. Our results illustrate the restrictive nature of some assumptions made in the literature. Typically multiple RJVs of different sizes form in equilibrium. In general, RJVs should not be promoted if they entail product market collusion. Given the information available to policy-makers, it is unlikely that an R&D policy more refined than analyzing and allowing RJVs on a case-by-case basis is feasible. Copyright © 1999 John Wiley & Sons, Ltd.

Suggested Citation

  • Patrick Greenlee & Bruno Cassiman, 1999. "Product market objectives and the formation of research joint ventures," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(3), pages 115-130.
  • Handle: RePEc:wly:mgtdec:v:20:y:1999:i:3:p:115-130 DOI: 10.1002/(SICI)1099-1468(199905)20:3<115::AID-MDE927>3.0.CO;2-V

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    References listed on IDEAS

    1. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-1137, December.
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    5. Poyago-Theotoky, Joanna, 1995. "Equilibrium and Optimal Size of a Research Joint Venture in an Oligopoly with Spillovers," Journal of Industrial Economics, Wiley Blackwell, vol. 43(2), pages 209-226, June.
    6. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
    7. Kamien, Morton I. & Zang, Israel, 2000. "Meet me halfway: research joint ventures and absorptive capacity," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 995-1012, October.
    8. Francis Bloch, 1995. "Endogenous Structures of Association in Oligopolies," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 537-556, Autumn.
    9. Fershtman, Chaim & Gandal, Neil, 1994. "Disadvantageous semicollusion," International Journal of Industrial Organization, Elsevier, vol. 12(2), pages 141-154, June.
    10. 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.
    11. De Bondt, Raymond & Veugelers, Reinhilde, 1991. "Strategic investment with spillovers," European Journal of Political Economy, Elsevier, vol. 7(3), pages 345-366, October.
    12. Greenlee, P., 1999. "Endogenous Formation of Competitive Research Sharing Joint Ventures," Papers 99-2, U.S. Department of Justice - Antitrust Division.
    13. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters,in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
    14. Jacquemin, Alexis & Soete, Luc, 1994. "Co-operation in R&D, efficiency and European policy," European Review, Cambridge University Press, vol. 2(01), pages 65-72, January.
    15. Grossman, Gene M & Shapiro, Carl, 1986. "Research Joint Ventures: An Antitrust Analysis," Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(2), pages 315-337, Fall.
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    Cited by:

    1. 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.
    2. Martin Woerter, 2011. "Driving forces for research and development strategies: an empirical analysis based on firm-level panel data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(7), pages 611-636, March.
    3. López, Ángel Luis & Vives, Xavier, 2016. "Cross-ownership, R&D Spillovers, and Antitrust Policy," CEPR Discussion Papers 11315, C.E.P.R. Discussion Papers.
    4. Busom, Isabel & Fernández-Ribas, Andrea, 2008. "The impact of firm participation in R&D programmes on R&D partnerships," Research Policy, Elsevier, vol. 37(2), pages 240-257, March.
    5. Schmidt, Tobias, 2005. "Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany," ZEW Discussion Papers 05-22 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Bruno Cassiman & Reinhilde Veugelers, 1998. "R&D cooperation and spillovers: Some empirical evidence," Economics Working Papers 328, Department of Economics and Business, Universitat Pompeu Fabra.
    7. Hyunbae Chun & Sung-Bae Mun, 2012. "Determinants of R&D cooperation in small and medium-sized enterprises," Small Business Economics, Springer, vol. 39(2), pages 419-436, September.
    8. Bourreau, Marc & Doğan, Pınar & Manant, Matthieu, 2016. "Size of RJVs with partial cooperation in product development," International Journal of Industrial Organization, Elsevier, vol. 46(C), pages 77-106.
    9. 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 201405, University of Barcelona, Regional Quantitative Analysis Group, revised Mar 2014.
    10. Martin Woerter, 2012. "Technology proximity between firms and universities and technology transfer," The Journal of Technology Transfer, Springer, vol. 37(6), pages 828-866, December.
    11. Cassiman, Bruno & Veugelers, Rainhilde, 2003. "Which firms have cooperative R&D agreements with universities? Some empirical evidence from Belgian manufacturing," IESE Research Papers D/502, IESE Business School.
    12. 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.
    13. Laura Abramovsky & Elisabeth Kremp & Alberto López & Tobias Schmidt & Helen Simpson, 2005. "Understanding co-operative R&D activity: evidence from four European countries," IFS Working Papers W05/23, Institute for Fiscal Studies.
    14. Duso, Tomaso & Pennings, Enrico & Seldeslachts, Jo, 2010. "Learning dynamics in research alliances: A panel data analysis," Research Policy, Elsevier, vol. 39(6), pages 776-789, July.
    15. Veugelers, Reinhilde & Cassiman, Bruno, 2005. "R&D cooperation between firms and universities. Some empirical evidence from Belgian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 23(5-6), pages 355-379, June.
    16. Duso, Tomaso & Pennings, Enrico & Seldeslachts, Jo, 2007. "The Dynamics of Research Joint Ventures: A Panel Data Analysis," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 221, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    17. Wegberg Marc van, 2003. "The grand coalition versus competing coalitions: trade-offs in how to standardize," Research Memorandum 032, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    18. repec:dau:papers:123456789/6963 is not listed on IDEAS
    19. Aikaterini KOKKINOU, 2010. "Economic growth, innovation and collaborative research and development activities," Management & Marketing, Economic Publishing House, vol. 5(1), Spring.
    20. repec:dau:papers:123456789/5009 is not listed on IDEAS
    21. Ángel L. López & Xavier Vives, 2016. "Overlapping Ownership, R&D Spillovers, and Antitrust Policy," CESifo Working Paper Series 5935, CESifo Group Munich.
    22. Mari­n, Pedro L. & Siotis, Georges, 2008. "Public policies towards Research Joint Venture: Institutional design and participants' characteristics," Research Policy, Elsevier, vol. 37(6-7), pages 1057-1065, July.
    23. Spyros Arvanitis & Ursina Kubli & Martin Woerter, 2005. "Determinants of Knowledge and Technology Transfer Activities Between Firms and Science Institutions in Switzerland: An Analysis Based on Firm Data," KOF Working papers 05-116, KOF Swiss Economic Institute, ETH Zurich.
    24. Marín Uribe, Pedro Luis & Siotis, Georges, 2002. "Public Policies Towards Research Joint Venture Formation: Designs and Outcomes," CEPR Discussion Papers 3772, C.E.P.R. Discussion Papers.

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