Joint Venture for a New Product and Antitrust Exemptions

Maria R. Battaggion and Paolo Garella

Australian Economic Papers, 2001, vol. 40, issue 3, 247-262

Abstract: 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.

Date: 2001
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