*Collusion and Research Joint Ventures

17 Pages Posted: 1 Dec 2009

See all articles by Kaz Miyagiwa

Kaz Miyagiwa

Emory University - Department of Economics; Osaka University - Institute of Social and Economic Research (ISER); Florida International University (FIU) - Department of Economics

Abstract

I examine the question whether cooperation in R&D among firms producing similar products 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 non-cooperative R&D leads to an inter-firm asymmetry, destabilizing collusion in pre-discovery and post-discovery periods. Innovation sharing under cooperative R&D preserves the symmetry and also increases total profit, thereby facilitating collusion. However, welfare may increase with cooperative R&D. I also examine the condition for collusion under licensing and compare the results.

Suggested Citation

Miyagiwa, Kaz, *Collusion and Research Joint Ventures. The Journal of Industrial Economics, Vol. 57, Issue 4, pp. 768-784, December 2009. Available at SSRN: https://ssrn.com/abstract=1513605 or http://dx.doi.org/10.1111/j.1467-6451.2009.00399.x

Kaz Miyagiwa (Contact Author)

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki Osaka 567-0047
Japan

Florida International University (FIU) - Department of Economics ( email )

Miami, FL 33199
United States

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