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Product market objectives and the formation of research joint ventures

Author

Listed:
  • Patrick Greenlee

    (Antitrust Division, US Department of Justice, Washington, DC, USA)

  • Bruno Cassiman

    (Department of Economics and Business, Universitat Pompeu Fabra, Barcelona, Spain)

Abstract

In this paper we extend the existing literature on research and development (R&D) investments and research joint ventures (RJVs) in two important ways. First, we analyze and compare the case where firms collude in the product market to the benchmark case of competition in the output market. Second, we allow firms to form coalitions endogenously as a separate stage in the game. We develop profit functions that depend on the partition of firms into joint ventures and the nature of product competition between venture partners. Our results illustrate the restrictive nature of some assumptions made in the literature. Typically multiple RJVs of different sizes form in equilibrium. In general, RJVs should not be promoted if they entail product market collusion. Given the information available to policy-makers, it is unlikely that an R&D policy more refined than analyzing and allowing RJVs on a case-by-case basis is feasible. Copyright © 1999 John Wiley & Sons, Ltd.

Suggested Citation

  • Patrick Greenlee & Bruno Cassiman, 1999. "Product market objectives and the formation of research joint ventures," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(3), pages 115-130.
    • Handle: RePEc:wly:mgtdec:v:20:y:1999:i:3:p:115-130
    DOI: 10.1002/(SICI)1099-1468(199905)20:3<115::AID-MDE927>3.0.CO;2-V
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    References listed on IDEAS

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