Welfare Effects of NCRA and NCPAYi Liu, Margaret O'Reilly-Allen and Zaher Zantout American Journal of Economics and Sociology, 2007, vol. 66, issue 5, pages 985-1004 Abstract: Cooperative R&D and production joint ventures may enable firms to achieve significant cost efficiencies. However, they can also be a means of controlling industry output and raising product prices. A review of the literature on the welfare implications of allowing rival firms to cooperate in the R&D and production stages indicates that the issue is controversial from a theoretical perspective. There is need to examine the motivations of R&D and production joint ventures in order to assess the welfare implications of the National Cooperative Research Act (NCRA) of 1984 and National Cooperative Production Amendments (NCPA) of 1993, which relaxed the antitrust treatment of R&D and production joint ventures. Using samples of 127 cooperative R&D joint ventures and 342 cooperative production joint ventures announced by U.S. domestic firms during 1979-1999, this article finds that these endeavors do not meet the criteria for collusive behavior specified by the market power doctrine. We interpret these findings as suggesting that cooperative R&D and production joint ventures are motivated by cost efficiencies and are, therefore, welfare enhancing. Our results pose some challenges to the doctrine that antitrust actions by regulatory authorities are always welfare improving. Copyright 2007 American Journal of Economics and Sociology, Inc.. Downloads: (external link) Related works: Ordering information: This journal article can be ordered from Access Statistics for this article American Journal of Economics and Sociology is edited by Laurence S. Moss More articles in American Journal of Economics and Sociology from Blackwell Publishing |
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