R&D Cooperation Facilitates Cartel Formation

Jacek Prokop () and Adam Karbowski ()
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Adam Karbowski: Warsaw School of Economics

Chapter Chapter 7 in Advances in Cross-Section Data Methods in Applied Economic Research, 2020, pp 103-113 from Springer

Abstract: Abstract The objective of this research is to investigate the impact of R&D cooperation between firms on industry cartel formation. We consider process R&D investments aimed at reduction of the unit costs of manufacturing. These investments create positive externalities for the competitors. We assume that the competition between rival firms in the industry takes place according to the Stackelberg (quantity) leadership model. For simplicity, we focus on the duopoly symmetric case. Numerical analysis shows that closer cooperation between rivals at the R&D stage strengthens the incentives to create a cartel in the final product market, thus serious public policy concerns occur.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-38253-7_7

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DOI: 10.1007/978-3-030-38253-7_7

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