Endogenous Formation of Competitive Research Sharing Joint Ventures

Abstract

Research joint ventures may coordinate research investments or improve research sharing. When research joint venture partners only share R&D results, large consortia are more profitable than small ones, and joint ventures prefer their rivals dispersed. According to a coalition formation game, an oligopoly partitions itself asymmetrically into two or three coalitions for a wide range of parameter values. In contrast to the case where joint ventures motivate joint profit maximizing research investments, an industry-wide joint venture maximizes welfare when spillovers are low, and a ban is preferred only for high spillovers. For intermediate values, two or more competing research sharing consortia are optimal.

JEL Classification: O31