Market shares, R&D agreements, and the EU block exemption

Richard Ruble and Bruno Versaevel

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Abstract: Regulation (EC) No 1217/2010 on the application of Article 101(3) of the Treaty on the Functioning of theEuropean Union to categories of R&D agreements exempts horizontal R&D agreements from antitrustconcerns when the combined market share of participants is low enough. We examine the theoreticalbasis for this criterion by extending existing models so that a subset of firms innovates and participates inan R&D cooperation agreement. We show that the incentive to increase innovation depends on a complexset of effects. We identify one, the outsider effect, that can lead firms to increase R&D under cooperationprecisely when their combined market share is high. In a general model in which all firms innovate, wealso find that R&D agreements can be more beneficial at higher market shares. We argue that existingtheory therefore does not support limiting the exemption to low market shares.

Keywords: R&D; Cooperative R&D; Regulation; Spillovers (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

Published in International Review of Law and Economics, 2014, 37, pp. 15-25

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Journal Article: Market shares, R&D agreements, and the EU block exemption (2014)
Working Paper: Market shares, R&D agreements, and the EU block exemption (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00879047

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