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

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Listed:
  • Jeroen Hinloopen

    (University of Amsterdam, The Netherlands)

  • Grega Smrkolj

    (Newcastle University, United Kingdom)

  • Florian Wagener

    (University of Amsterdam, The Netherlands)

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.

Suggested Citation

  • Jeroen Hinloopen & Grega Smrkolj & Florian Wagener, 2017. "R&D Cooperatives and Market Collusion: A Global Dynamic Approach," Tinbergen Institute Discussion Papers 17-020/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20170020
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    Cited by:

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    3. Gezer, Serhat, 2019. "Delaying product introduction: A dynamic analysis with endogenous time horizon," Journal of Economic Dynamics and Control, Elsevier, vol. 102(C), pages 96-114.

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    More about this item

    Keywords

    Antitrust policy; Bifurcations; Collusion; R&D cooperatives; Spillovers;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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