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Joint Venture for a New Product and Antitrust Exemptions
Author(s) -
Battaggion Maria R.,
Garella Paolo G.
Publication year - 2001
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.00125
Subject(s) - business , industrial organization , joint venture , product (mathematics) , production (economics) , microeconomics , set (abstract data type) , joint (building) , commerce , economics , computer science , engineering , architectural engineering , geometry , mathematics , programming language
The present paper analyses different forms of organising a JV for the introduction of a new product. It is shown that under non contractible effort levels by the parent companies, a non cooperative solution, due to free‐riding, is less desirable than one where firms cooperate not only at the R&D but also at the selling stage. Also, allowing firms to set up a production JV may be an alternative way to improve upon the fully non cooperative solution. An Antitrust authority should therefore consider the possible destructive effects on the JV results of prohibitions of inter‐firm cooperation.