Joint Venture for a New Product and Antitrust Exemptions

The present paper analyses different forms of organising a JV for the introduction of a new product. It is shown that under non contractible effort levels by the parent companies, a non cooperative solution, due to free-riding, is less desirable than one where firms cooperate not only at the R&D but also at the selling stage. Also, allowing firms to set up a production JV may be an alternative way to improve upon the fully non cooperative solution. An Antitrust authority should therefore consider the possible destructive effects on the JV results of prohibitions of inter-firm cooperation.     

Quality competition and entry: a media market case

In this paper, we study the optimal tax policy in a differential oligopoly game where the competing firms share the access to a productive renewable resource. We show that, in a Feedback Nash Equilibrium of the game, a linear Markov tax, imposed on the output, and specified as an affine function of the available resource stock, leads the competing firms to produce the socially optimal quantities over time, thus overcoming the dynamic interplay between the tragedy of the commons and the firms’ market power. The optimal tax turns out to be independent from the resource stock in a monopoly, and it cannot be defined in a duopoly.     

On the optimality of information sharing between integrated and vertically separated competitors

A manufacturer relies on an exclusive subcontractor for production and competes horizontally against an integrated rival that produces in-house. The exclusive agent is privately informed about the marginal cost of production. When marginal costs are correlated across companies, information sharing benefits both companies due to reduced uncertainty, but it affects the contracting terms within the vertical hierarchy and creates horizontal externalities between companies. We show that the manufacturer who suffers from agency cost benefits more from sharing information than his rival performing in-house production only when costs are highly correlated, and in this case, information sharing may actually benefit consumers.