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RJVs and Price Collusione under Endogenous Product Differentiation

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  • L. Lambertini
  • S. Poddar
  • D. Sasaki

Abstract

We characterise the interplay between firms' decisions in product development, be it joint or independent, and their ensuing repeated price behaviour, either collusive or Bertrand- Nash. Firms face a choice between participating in a joint venture inventing a single product, and in independent ventures developing their respective products which can be either horizontally or vertically differentiated. We prove that joint product development and the resulting lack of horizontal product differentiation may destabilise collusion, whilst firms' R&D decisions have no bearings on collusive stability in the vertical differentiation setting. We also discover the non-monotone dependence of firms' venture decisions at the development stage upon their intertemporal preferences, as well as upon consumers' willingness to pay.

Suggested Citation

  • L. Lambertini & S. Poddar & D. Sasaki, 1997. "RJVs and Price Collusione under Endogenous Product Differentiation," Working Papers 295, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:295
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    Cited by:

    1. Lambertini Luca, 2000. "Technology and Cartel Stability under Vertical Differentiation," German Economic Review, De Gruyter, vol. 1(4), pages 421-442, December.

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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