Sustaining Cooperation with Joint Ventures

Posted: 13 Apr 2009

See all articles by Russell Cooper

Russell Cooper

University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER)

Thomas W. Ross

University of British Columbia (UBC)

Date Written: May 2009

Abstract

Antitrust agencies and courts have expressed concerns that joint ventures and strategic alliances between firms that compete in other markets might serve to reduce the vigor of their competition. This article explores a mechanism through which a joint venture between two (or more) firms in one market can serve to facilitate collusion in another market-even one unconnected vertically or horizontally by costs or demand. In the models studied here, play in one market has the effect of altering players' beliefs about their rivals' play in the second market. A joint venture in one market may provide a credible punishment mechanism for firms colluding in another market. The joint venture may also provide a vehicle for the transmission, between players, of information in a way that helps cooperative types find each other and collude in other markets. (JEL L12, L41, K21)

Suggested Citation

Cooper, Russell W. and Ross, Thomas W., Sustaining Cooperation with Joint Ventures (May 2009). The Journal of Law, Economics, & Organization, Vol. 25, Issue 1, pp. 31-54, 2009. Available at SSRN: https://ssrn.com/abstract=1372577 or http://dx.doi.org/10.1093/jleo/ewm051

Russell W. Cooper (Contact Author)

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Thomas W. Ross

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

Register to save articles to
your library

Register

Paper statistics

Abstract Views
424
PlumX Metrics