Do Research Joint Ventures Serve a Collusive Function?

Every year thousands of Örms are engaged in research joint ventures (RJV), where all knowledge gained through R&D is shared among members. Most of the empirical literature assumes members are non-cooperative in the product market. But many RJV members are rivals leaving open the possibility that Örms may form RJVs to facilitate collusion. We examine this by exploiting variation in RJV formation generated by a policy change that a§ects the collusive beneÖts but not the research synergies associated with a RJV. We use data on RJVs formed between 1986 and 2001 together with Örm-level information from Compustat to estimate a RJV participation equation. After correcting for the endogeneity of R&D and controlling for RJV characteristics and Örm attributes, we Önd the decision to join is impacted by the policy change. We also Önd the magnitude is signiÖcant: the policy change resulted in an average drop in the probability of joining a RJV of 34% among telecommunications Örms, 33% among computer and semiconductor manufacturers, and 27% among petroleum reÖning Örms. Our results are consistent with research joint ventures serving a collusive function.