LESS IS MORE? RESEARCH JOINT VENTURES AND ENTRY DETERRENCE

Paul O'Sullivan ()
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Paul O'Sullivan: Department of Economics Finance and Accounting, National University of Ireland, Maynooth

Economics Department Working Paper Series from Department of Economics, National University of Ireland - Maynooth

Abstract: This paper analyses the incentives of incumbent firms to form a first-mover RJV when faced with possible entry. If entry is accommodated, firms’ relative profits under R&D competition and RJV formation depend on R&D spillovers and firms’ R&D efficiency. RJV formation may make entry unprofitable if spillovers are sufficiently low. If entry is deterred, RJV formation may be more profitable. Similarly, whether accommodation or deterrence is more profitable under RJV formation depends on spillovers and the firms’ efficiency. How welfare is affected by RJV formation depends on whether output is exported or domestically consumed. There may be a role for active government policy to affect market outcomes.

JEL-codes: D2 L2 L4 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2013
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind, nep-ino and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:may:mayecw:n245-13.pdf

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