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R&D and market sharing agreements

Author

Listed:
  • Dollinger, Jérôme

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

  • Mauleon, Ana

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

  • Vannetelbosch, Vincent

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

Abstract

We analyze the formation of R&D alliances and market sharing (MS) agreements by which firms commit not to enter in each other’s territory in oligopolistic markets. We show that R&D alliance structures are stable only in the presence of MS agreements. Thus, long lasting R&D alliances could signal the existence of some MS agreement in the industry. We characterize the set of stable symmetric pairs of coalition structures with identical R&D and MS structure. In addition, we show the stability of a class of asymmetric pairs of coalition structures where the most efficient firms form both an R&D and a MS agreement while the other firms do not form any MS agreement but form two smaller R&D alliances. Even though MS agreements are detrimental for consumers, we show that the stable pairs of coalition structures are a better outcome for consumers than no cooperation at all.

Suggested Citation

  • Dollinger, Jérôme & Mauleon, Ana & Vannetelbosch, Vincent, 2024. "R&D and market sharing agreements," LIDAM Reprints CORE 3284, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:3284
    DOI: https://doi.org/10.1007/s00199-024-01554-z
    Note: In: Economic Theory, 2024
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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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