COLLUSION AND RESEARCH JOINT VENTURES* |
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Authors: | KAZ MIYAGIWA |
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Institution: | Department of Economics, Emory University, 1602 Fishburne Drive, Atlanta, Georgia, 30322, U.S.A.e‐mail:kmiyagiwa@gmail.com |
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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. |
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