IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

In Defense of Trusts: R&D Cooperation in Global Perspective

  • Hinloopen, J.

    ()

    (University of Amsterdam)

  • Smrkolj, G.

    ()

    (University of Amsterdam)

  • Wagener, F.O.O.

    ()

    (University of Amsterdam)

We examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. For that we utilize a dynamic model of R&D whereby we consider all possible initial marginal cost levels (technologies), including those that exceed the choke price. This global analysis yields four possibilities: initial marginal costs are above the choke price and this technology is, or is not, developed further, and initial marginal costs are below the choke price and the technology is, or is not, (eventually) taken off the market. We show that an extension of the cooperative agreement towards collusion in the product market is not necessarily welfare reducing: if firms collude, they (i) develop further a wider range of initial technologies, (ii) invest more in R&D such that process innovations are pursued more quickly, and (iii) abandon the technology for a smaller set of initial marginal costs. We also discuss the implications of our analysis for antitrust policy.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://cendef.uva.nl/binaries/content/assets/subsites/amsterdam-school-of-economics-research-institute/cendef/working-papers-2013/in-defense-of-trusts-2013.pdf?1413883875114
Download Restriction: no

Paper provided by Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance in its series CeNDEF Working Papers with number 13-05.

as
in new window

Length:
Date of creation: 2013
Date of revision:
Handle: RePEc:ams:ndfwpp:13-05
Contact details of provider: Postal:
Dept. of Economics and Econometrics, Universiteit van Amsterdam, Roetersstraat 11, NL - 1018 WB Amsterdam, The Netherlands

Phone: + 31 20 525 52 58
Fax: + 31 20 525 52 83
Web page: http://www.fee.uva.nl/cendef/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Salant, S.W. & Shaffer, G., 1997. "Optimal Asymmetric Strategies in Research Joint Ventures," Papers 97-06, Michigan - Center for Research on Economic & Social Theory.
  2. Kiseleva, T. & Wagener, F.O.O., 2009. "Bifurcations of optimal vector fields in the shallow lake model," CeNDEF Working Papers 09-12, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  3. Geroski, P A, 1992. "Vertical Relations between Firms and Industrial Policy," Economic Journal, Royal Economic Society, vol. 102(410), pages 138-47, January.
  4. John Howells, 2002. "The Response of Old Technology Incumbents to Technological Competition - Does the Sailing Ship Effect Exist?," Journal of Management Studies, Wiley Blackwell, vol. 39(7), pages 887-906, November.
  5. Suetens, S., 2003. "Does R&D Cooperation Facilitate Price Collusion? An Experiment," Discussion Paper 2003-99, Tilburg University, Center for Economic Research.
  6. Gianfranco Atzeni & Claudio Piga, 2005. "R&D investment, Credit Rationing and Sample Selection," Discussion Paper Series 2005_6, Department of Economics, Loughborough University, revised Jun 2005.
  7. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, Oxford University Press, vol. 94(2), pages 429-436.
  8. 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 315-37, Fall.
  9. Lindenberg, Eric B & Ross, Stephen A, 1981. "Tobin's q Ratio and Industrial Organization," The Journal of Business, University of Chicago Press, vol. 54(1), pages 1-32, January.
  10. Jerry R. Green & Suzanne Scotchmer, 1995. "On the Division of Profit in Sequential Innovation," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 20-33, Spring.
  11. Kenneth G. Elzinga & David E. Mills, 2011. "The Lerner Index of Monopoly Power: Origins and Uses," American Economic Review, American Economic Association, vol. 101(3), pages 558-64, May.
  12. Brodley, Joseph F, 1990. "Antitrust Law and Innovation Cooperation," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 97-112, Summer.
  13. Petit, Maria Luisa & Tolwinski, Boleslaw, 1999. "R&D cooperation or competition?," European Economic Review, Elsevier, vol. 43(1), pages 185-208, January.
  14. Eugen Kovac & Viatcheslav Vinogradov & Krešimir Žigiæ, 2009. "Technological Leadership and Persistence of Monopoly under Endogenous Entry: Static versus Dynamic Analysis," CERGE-EI Working Papers wp401, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  15. 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.
  16. Jeroen Hinloopen & Grega Smrkolj & Florian Wagener, 2011. "From Mind to Market: A Global, Dynamic Analysis of R&D," Tinbergen Institute Discussion Papers 11-139/1, Tinbergen Institute.
  17. Nick Bloom & Mark Schankerman & John Van Reenen, 2005. "Identifying technology spillovers and product market rivalry," LSE Research Online Documents on Economics 3728, London School of Economics and Political Science, LSE Library.
  18. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  19. Grossman, G.M. & Helpman, E., 1989. "Quality Ledders In The Theory Of Growth," Papers 148, Princeton, Woodrow Wilson School - Public and International Affairs.
  20. Luca Lambertini & Andrea Mantovani, 2010. "Process and product innovation: A differential game approach to product life cycle," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(2), pages 227-252.
  21. Michel, P., 1980. "On the Transversality Condition in Infinite Horizon Optimal Problems," Cahiers de recherche 8024, Universite de Montreal, Departement de sciences economiques.
  22. 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 1293-306, December.
  23. L. Lambertini & A. Mantovani, 2005. "Process and Product Innovation by a Multiproduct Monopolist: A Dynamic Approach," Working Papers 551, Dipartimento Scienze Economiche, Universita' di Bologna.
  24. Tomaso Duso & Lars-Hendrik Roeller & Jo Seldeslachts, 2010. "Collusion through Joint R&D: An Empirical Assessment," Tinbergen Institute Discussion Papers 10-112/1, Tinbergen Institute.
  25. Cooper, Arnold C. & Schendel, Dan, 1976. "Strategic responses to technological threats," Business Horizons, Elsevier, vol. 19(1), pages 61-69, February.
  26. Lars-Hendrik Röller & Ralph Siebert & Mihkel M. Tombak, 2007. "Why Firms Form (or do not Form) RJVS," Economic Journal, Royal Economic Society, vol. 117(522), pages 1122-1144, 07.
  27. 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 1133-37, December.
  28. Cellini, Roberto & Lambertini, Luca, 2009. "Dynamic R&D with spillovers: Competition vs cooperation," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 568-582, March.
  29. C. Lanier Benkard, 2004. "A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft," Review of Economic Studies, Oxford University Press, vol. 71(3), pages 581-611.
  30. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
  31. Roberto Hern·n & Pedro L. MarÌn & Georges Siotis, 2003. "An empirical evaluation of the determinants of Research Joint Venture Formation," Journal of Industrial Economics, Wiley Blackwell, vol. 51(1), pages 75-89, 03.
  32. Kiseleva, T. & Wagener, F.O.O., 2011. "Bifurcations of Optimal Vector Fields," CeNDEF Working Papers 11-05, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  33. C. Lanier Benkard, 2000. "A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft," NBER Working Papers 7710, National Bureau of Economic Research, Inc.
  34. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  35. Yannis Caloghirou & Stavros Ioannides & Nicholas S. Vonortas, 2003. "Research Joint Ventures," Journal of Economic Surveys, Wiley Blackwell, vol. 17(4), pages 541-570, 09.
  36. David Besanko & Ulrich Doraszelski & Yaroslav Kryukov & Mark Satterthwaite, 2010. "Learning-by-Doing, Organizational Forgetting, and Industry Dynamics," Econometrica, Econometric Society, vol. 78(2), pages 453-508, 03.
  37. Wagener, F. O. O., 2003. "Skiba points and heteroclinic bifurcations, with applications to the shallow lake system," Journal of Economic Dynamics and Control, Elsevier, vol. 27(9), pages 1533-1561, July.
  38. Benkard, C. Lanier, 2000. "A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft," Research Papers 1636, Stanford University, Graduate School of Business.
  39. 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.
  40. Jeroen Hinloopen, 2003. "R&D Efficiency Gains Due to Cooperation," Journal of Economics, Springer, vol. 80(2), pages 107-125, October.
  41. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, March.
  42. Michelle S. Goeree & Eric Helland, 2009. "Do research joint ventures serve a collusive function?," IEW - Working Papers 448, Institute for Empirical Research in Economics - University of Zurich, revised Jul 2012.
  43. 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.
  44. 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.
  45. Martin, Stephen, 1996. "R & D joint ventures and tacit product market collusion," European Journal of Political Economy, Elsevier, vol. 11(4), pages 733-741, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ams:ndfwpp:13-05. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cees C.G. Diks)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.