Strategic Choice of Partners: Research Joint Ventures and Market Power

Mihkel Tombak, Röller, Lars-Hendrik and Ralph Siebert

No 2617, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The literature on research joint ventures (RJVs) has emphasized internalizing spillovers and cost-sharing as motives for RJV formation. In this paper we develop an additional explanation: the incentive to exclude rivals in order to gain market power. We illustrate this effect in a simple model of RJV formation with asymmetric firms. We then test our hypothesis by estimating an endogeneous switching model using data from the US National Cooperative Research Act. The empirical findings support our Hypothesis that RJVs can be used as an instrument by which firms leverage their market power in the product market.

Keywords: Research and development; Joint ventures; Product market competition (search for similar items in EconPapers)
JEL-codes: L0 L60 O30 (search for similar items in EconPapers)
Date: 2000-11
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Citations: View citations in EconPapers (7)

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