Do Research Joint Ventures Serve a Collusive Function?

Michelle Sovinsky and Eric Helland

No 13533, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Every year thousands of firms are engaged in research joint ventures (RJV), where knowledge gained through R&D is shared among members. Many members are rivals leaving open the possibility that firms form RJVs to facilitate product collusion. We exploit variation in RJV formation generated by a policy change that affects the collusive benefits but not the research synergies of a RJV. Estimates from our RJV participation equation indicate participation is impacted by the policy change. The magnitude is significant with an average drop in the probability of joining of 30%. Our results are consistent with RJVs serving a collusive function.

Date: 2019-02
New Economics Papers: this item is included in nep-com and nep-gth
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