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Less Is More? Research Joint Ventures And Entry Deterrence

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  • Paul O'Sullivan

    (Department of Economics Finance and Accounting, National University of Ireland, Maynooth)

Abstract

This paper analyses the incentives of incumbent firms to form a first-mover RJV when faced with possible entry. If entry is accommodated, firms’ relative profits under R&D competition and RJV formation depend on R&D spillovers and firms’ R&D efficiency. RJV formation may make entry unprofitable if spillovers are sufficiently low. If entry is deterred, RJV formation may be more profitable. Similarly, whether accommodation or deterrence is more profitable under RJV formation depends on spillovers and the firms’ efficiency. How welfare is affected by RJV formation depends on whether output is exported or domestically consumed. There may be a role for active government policy to affect market outcomes.

Suggested Citation

  • Paul O'Sullivan, 2013. "Less Is More? Research Joint Ventures And Entry Deterrence," Economics Department Working Paper Series n245-13.pdf, Department of Economics, National University of Ireland - Maynooth.
    • Handle: RePEc:may:mayecw:n245-13.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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