Technology sharing and tacit collusion

Nadav Levy

International Journal of Industrial Organization, 2012, vol. 30, issue 2, 204-216

Abstract: I study the prospects for collusion between rival firms that share technological know-how. Two common forms of technology sharing are compared: a research joint venture (RJV) and licensing. Under licensing, firms can use the licensing fee to elicit higher levels of R&D than with an RJV. However, firms must also be induced to license innovations ex post. For a broad set of cases, licensing yields higher collusive profits to firms and higher prices to consumers. In other cases, licensing can only be induced through a very high license fee, leading to excessive R&D and lower profits. In these cases, the colluding firms prefer to share technology through an RJV.

Keywords: Collusion; Technology sharing; Research joint ventures; Licensing (search for similar items in EconPapers)
JEL-codes: L13 L24 L40 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:2:p:204-216

DOI: 10.1016/j.ijindorg.2011.09.002

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