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Market shares, R&D agreements, and the EU block exemption

Author

Listed:
  • Richard Ruble

    (EM - EMLyon Business School, GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Bruno Versaevel

    (EM - EMLyon Business School, GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Regulation (EC) No 1217/2010 on the application of Article 101(3) of the Treaty on the Functioning of theEuropean Union to categories of R&D agreements exempts horizontal R&D agreements from antitrustconcerns when the combined market share of participants is low enough. We examine the theoreticalbasis for this criterion by extending existing models so that a subset of firms innovates and participates inan R&D cooperation agreement. We show that the incentive to increase innovation depends on a complexset of effects. We identify one, the outsider effect, that can lead firms to increase R&D under cooperationprecisely when their combined market share is high. In a general model in which all firms innovate, wealso find that R&D agreements can be more beneficial at higher market shares. We argue that existingtheory therefore does not support limiting the exemption to low market shares.

Suggested Citation

  • Richard Ruble & Bruno Versaevel, 2014. "Market shares, R&D agreements, and the EU block exemption," Post-Print halshs-00879047, HAL.
    • Handle: RePEc:hal:journl:halshs-00879047
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    References listed on IDEAS

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    More about this item

    Keywords

    R&D; Cooperative R&D; Regulation; Spillovers;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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