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Collusion through Joint R&D: An Empirical Assessment

Tomaso Duso (), Lars-Hendrik Röller and Jo Seldeslachts ()

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: This paper tests whether upstream R&D cooperation leads to downstream collusion. We consider an oligopolistic setting where firms enter in research joint ventures (RJVs) to lower production costs or coordinate on collusion in the product market. We show that a sufficient condition for identifying collusive behavior is a decline in the market share of RJV-participating firms, which is also necessary and sufficient for a decrease in consumer welfare. Using information from the US National Cooperation Research Act, we estimate a market share equation correcting for the endogeneity of RJV participation and R&D expenditures. We find robust evidence that large networks between direct competitors – created through firms being members in several RJVs at the same time – are conducive to collusive outcomes in the product market which reduce consumer welfare. By contrast, RJVs among non-competitors are efficiency enhancing.

Keywords: Research Joint Ventures; Innovation; Collusion; NCRA (search for similar items in EconPapers)
JEL-codes: K21 L24 L44 D22 O32 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-ipr, nep-pr~, nep-law and nep-tid
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Related works:
Journal Article: Collusion Through Joint R&D: An Empirical Assessment (2014) Downloads
Working Paper: Collusion through joint R&D: An empirical assessment (2012) Downloads
Working Paper: Collusion through Joint R&D: An Empirical Assessment (2010) Downloads
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