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R&D Cooperation or Competition in the Presence of Cannibalization


  • Paul Belleflamme

    (Queen Mary and Westfield College, University of London)


R&D cooperation is reconsidered in situations where firms direct R&D activities towards a new product that cannibalizes the firms' existing products. For soft cannibalization, the welfare-maximizing arrangement between firms involves, for low R&D costs, the formation of a separate entity that independently chooses both the output level of the new good and the level of R&D expenditures and otherwise, joint decisions about R&D but independent decisions about production. Yet, as cannibalization increases, firms find it unprofitable to market the new good unless they collaborate more narrowly. Merger should then be permitted for the socially desirable introduction of the new good.

Suggested Citation

  • Paul Belleflamme, 2000. "R&D Cooperation or Competition in the Presence of Cannibalization," Working Papers 413, Queen Mary University of London, School of Economics and Finance.
  • Handle: RePEc:qmw:qmwecw:wp413

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    References listed on IDEAS

    1. Bensaid, Bernard & Encaoua, David & Winckler, Antoine, 1994. "Competition, cooperation and mergers: Economic and policy issues," European Economic Review, Elsevier, vol. 38(3-4), pages 637-650, April.
    2. 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 1293-1306, December.
    3. Paul Belleflamme & Francis Bloch, 2000. "Optimal Ownership Structures in Asymmetric Joint Ventures," Working Papers 411, Queen Mary University of London, School of Economics and Finance.
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    More about this item


    R&D cooperation; Joint ventures; Cannibalization;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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