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Market Share, R&D Cooperation, and EU Competition Policy

  • Richard Rubble

    (EMLYON Business School - EMLYON Business School)

  • Bruno Versaevel

    ()

    (EMLYON Business School - EMLYON Business School, GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)

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    Current EU policy exempts horizontal R&D agreements from antitrust con- cerns when the combined market shares of participants are low enough. This paper argues that existing theory does not support limiting the exemption to low market shares. This is done by introducing a set of non-innovating outside firms to the standard framework to assess what link might exist between the market share of innovating firms and the product market benefits of cooperation. With R&D output choices, the market share criterion, while it rules out the most socially harmful R&D cooperation agreements, also hinders the most beneficial ones. With R&D input choices, cooperation may actually be desirable in concentrated industries, and harmful in more competitive ones. If R&D cooperation does have anti-competitive effects in product markets, it seems that these are therefore best addressed by other tools than market share criteria.

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    Date of creation: 2009
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    Handle: RePEc:hal:journl:halshs-00377541
    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00377541/en/
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