English, Article, Journal or magazine article edition: Collusion and Research Joint Ventures Kaz Miyagiwa

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Bookmark: http://trove.nla.gov.au/version/16598
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Collusion and Research Joint Ventures
Author
  • Kaz Miyagiwa
Physical Description
  • preprint
Notes
  • We examine whether cooperation in R&​D leads to product market collusion. Suppose firms compete in a stochastic R&​D race while maintaining the collusive equilibrium in a repeated-game framework. Innovation creates a cost asymmetry and destabilizes the collusive equilibrium. Firms forming an R&​D joint venture can maintain cost symmetries through technology sharing agreement, thereby stabilizing collusion. The stability of post-discovery collusion makes collusion stable in pre-discovery periods. However, formation of R&​D cooperatives may increase social welfare because firms share an efficient technology. Interestingly, a welfare improvement is less likely if innovation leads to a large cost reduction.
  • RePEc:emo:wp2003:0705
  • We examine whether cooperation in R&​D leads to product market collusion. Suppose that firms engage in a stochastic R&​D race while maintaining the collusive equilibrium in a repeated-game framework. Innovation under competitive R&​D creates inter-firm asymmetries, which destabilizes the collusive equilibrium. Innovation sharing through cooperative R&​D preserves symmetries, thereby facilitating collusion. Sharing an efficient technology also increases industry profit, which contributes to the collusion stability but also raises social welfare. Interestingly, a welfare improvement is less likely if innovation leads to a large cost reduction. The effect of licensing under competition R&​D is also examined.
  • RePEc:dpr:wpaper:0704
Language
  • English
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