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R&D Cooperatives and Market Collusion: A Global Dynamic Approach

Jeroen Hinloopen (), Grega Smrkolj () and Florian Wagener ()

No 17-020/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We present a continuous-time generalization of the seminal R&D model of d'Aspremont and Jacquemin (The American Economic Review 78(5): 1133–1137, 1988) to examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. We consider all trajectories that are candidates for an optimal solution as well as initial marginal cost levels that exceed the choke price. Firms that collude develop further a wider range of initial technologies, pursue innovations more quickly, and are less likely to abandon a technology. Product market collusion could thus yield higher total surplus.

Keywords: Antitrust policy; Bifurcations; Collusion; R&D cooperatives; Spillovers (search for similar items in EconPapers)
JEL-codes: D43 D92 L13 L41 O31 O38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind and nep-ino
Date: 2017-02-10
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Working Paper: R&D Cooperatives and Market Collusion: A Global Dynamic Approach (2016) Downloads
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