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Strategic Choice of Partners: Research Joint Ventures and Market Power

  • Röller, Lars-Hendrik
  • Siebert, Ralph
  • Tombak, Mihkel

The literature on research joint ventures (RJVs) has emphasized internalizing spillovers and cost-sharing as motives for RJV formation. In this paper we develop an additional explanation: the incentive to exclude rivals in order to gain market power. We illustrate this effect in a simple model of RJV formation with asymmetric firms. We then test our hypothesis by estimating an endogeneous switching model using data from the US National Cooperative Research Act. The empirical findings support our Hypothesis that RJVs can be used as an instrument by which firms leverage their market power in the product market.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2617.

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Date of creation: Nov 2000
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Handle: RePEc:cpr:ceprdp:2617
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  12. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-33, June.
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  17. Kogut, Bruce, 1989. "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 183-98, December.
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