 The EU Block Exemption and Horizontal R&D AgreementsDerek J. Clark, Anita Michalsen and Leif Roger Olsen International Journal of the Economics of Business, 2021, vol. 28, issue 2, 221-245 Abstract: We analyze the effect of the European Union Competition Authority’s block exemption towards R&D cooperatives in a horizontal market structure, valid as long as the combined product market share is not too large. Two less efficient firms attempt to catch up with a technological leader, and may use the safe harbour provided by the legislation. We consider when the incentives of the R&D-performing firms are aligned with those of consumers, and when increases in the market share limit improves welfare. We show that an effective policy within this framework might be elusive. The market share restriction must be set in order that it is optimal for firms to use the safe harbour, and that this leads to more R&D than under competition. Even in this case, further increases in the market share restriction can harm welfare. This has widespread implications for how the EU Competition authority should respond to calls for an increase in the market share restriction. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:28:y:2021:i:2:p:221-245 Ordering information: This journal article can be ordered from DOI: 10.1080/13571516.2020.1823188 Access Statistics for this article International Journal of the Economics of Business is currently edited by Eleanor Morgan More articles in International Journal of the Economics of Business from Taylor & Francis Journals |
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