Do Research Joint Ventures Serve a Collusive Function?

58 Pages Posted: 19 Feb 2019

See all articles by Eric Helland

Eric Helland

Claremont McKenna College - Robert Day School of Economics and Finance; RAND

Michelle Sovinsky

University of Mannheim

Date Written: February 2019

Abstract

Every year thousands of firms are engaged in research joint ventures (RJV), where knowledge gained through R&D is shared among members. Many members are rivals leaving open the possibility that firms form RJVs to facilitate product collusion. We exploit variation in RJV formation generated by a policy change that affects the collusive benefits but not the research synergies of a RJV. Estimates from our RJV participation equation indicate participation is impacted by the policy change. The magnitude is significant with an average drop in the probability of joining of 30%. Our results are consistent with RJVs serving a collusive function.

Suggested Citation

Helland, Eric A. and Sovinsky, Michelle, Do Research Joint Ventures Serve a Collusive Function? (February 2019). CEPR Discussion Paper No. DP13533. Available at SSRN: https://ssrn.com/abstract=3336792

Eric A. Helland (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
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RAND ( email )

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Michelle Sovinsky

University of Mannheim

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