R &d and market sharing agreements

Jérôme Dollinger (), Ana Mauleon and Vincent Vannetelbosch ()
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Jérôme Dollinger: UCLouvain
Vincent Vannetelbosch: UCLouvain

Economic Theory, 2024, vol. 78, issue 3, No 7, 877-922

Abstract: Abstract We analyze the formation of R &D alliances and market sharing (MS) agreements by which firms commit not to enter in each other’s territory in oligopolistic markets. We show that R &D alliance structures are stable only in the presence of MS agreements. Thus, long lasting R &D alliances could signal the existence of some MS agreement in the industry. We characterize the set of stable symmetric pairs of coalition structures with identical R &D and MS structure. In addition, we show the stability of a class of asymmetric pairs of coalition structures where the most efficient firms form both an R &D and a MS agreement while the other firms do not form any MS agreement but form two smaller R &D alliances. Even though MS agreements are detrimental for consumers, we show that the stable pairs of coalition structures are a better outcome for consumers than no cooperation at all.

Keywords: R& D alliances; Market sharing agreements; Oligopoly; Cournot competition; Stability (search for similar items in EconPapers)
JEL-codes: C70 L13 L40 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00199-024-01554-z

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