*I would like to thank the Editor and an anonymous referee for their helpful comments and suggestions that led to substantial improvements. Thanks also go to Sue Mialon and Yuka Ohno for their comments on earlier versions of the paper. I appreciate the hospitality of the Osaka University Institute of Social and Economic Research where this work was completed. Errors are my own responsibility.
COLLUSION AND RESEARCH JOINT VENTURES*
Version of Record online: 24 NOV 2009
© 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 57, Issue 4, pages 768–784, December 2009
How to Cite
MIYAGIWA, K. (2009), COLLUSION AND RESEARCH JOINT VENTURES. The Journal of Industrial Economics, 57: 768–784. doi: 10.1111/j.1467-6451.2009.00399.x
- Issue online: 24 NOV 2009
- Version of Record online: 24 NOV 2009
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.