An Experimental Contribution to the Revision of the Guidelines on Research and Development Agreements

14 Pages Posted: 14 Dec 2010

See all articles by Christoph Engel

Christoph Engel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Date Written: December 2010

Abstract

The European Commission is working on a revision of its Guidelines on Research and Development Agreements. On this occasion, this note surveys the existing experimental evidence. Experiments add a number of additional arguments to the normative assessment. R&D agreements have a much smaller effect on later competition in the product market if they serve as a substitute for incomplete (legal) protection of innovation effort. They may help firms settle the resulting fairness issue, and stay away from investment wars. Using the results from 107 published experiments on oligopoly, a meta-study shows that clearing an R&D agreement can be beneficial since it removes the additional collusion incentive resulting from fear that, through successful innovation, competitors might gain an advantage. This is the case if the opposite market side has countervailing power, and the more market conditions are stable. By contrast, the meta-data suggests that R&D agreements increase the risk of collusion in the product market if products are substitutes, if capacity cannot immediately be extended, if market participants may communicate, and if they are experienced; the latter two conditions are very likely to hold in the field.

Keywords: antitrust, research and development agreements, block exemption, oligopoly experiments, innovation, meta-study

JEL Classification: D03, D43, K21, L13, L41, O31, O34

Suggested Citation

Engel, Christoph, An Experimental Contribution to the Revision of the Guidelines on Research and Development Agreements (December 2010). MPI Collective Goods Preprint, No. 2010/48, Available at SSRN: https://ssrn.com/abstract=1724606 or http://dx.doi.org/10.2139/ssrn.1724606

Christoph Engel (Contact Author)

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Universität Osnabrück - Faculty of Law

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