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R&D COOPERATION AND COLLUSION: THE CASE OF JOINT LABS *
Author(s) -
CABONDHERSIN MARIELAURE
Publication year - 2008
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2008.01067.x
Subject(s) - collusion , competition (biology) , microeconomics , homogeneous , product (mathematics) , social welfare , joint (building) , economic surplus , product market , order (exchange) , welfare , economics , industrial organization , business , market economy , mathematics , engineering , finance , incentive , combinatorics , architectural engineering , ecology , geometry , political science , law , biology
In the standard two‐stage framework of R&D/product market competition, the present note compares the performance of full cooperation (firms conduct R&D in a joint lab and collude in the product market) and full competition (firms compete in R&D as well as in the product market). The paper shows that (i) full cooperation leads to better results in terms of R&D efforts compared with non‐cooperation; (ii) collusion at the production stage may increase both producers' and consumers' surplus especially when the degree of spillovers is not too high and the products are not homogeneous; (iii) the gains in terms of social welfare from full cooperation increase when the efficiency of R&D decreases.