On the effect of imperfect collusion on profitability and R&D

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dc.contributor.author Escrihuela Villar, Marc
dc.contributor.author Guillén, Jorge
dc.date.accessioned 2018-10-26T18:21:33Z
dc.identifier.uri http://hdl.handle.net/11201/148310
dc.description.abstract We consider a theoretical model where firms can reduce their initial unit costs by spending on RΔ We show that the degree of product market collusion (captured by the coefficient of cooperation) might reduce firms' profits if innovation is made non-cooperatively. The intuition is that non-cooperative R&D introduces a negative externality where firms invest over and above the amount required to minimize costs so as to extract profits from their rival firm. Therefore, when product market competition drops below a certain level, a relatively large amount is spent on R&D with just a small output, making further collusion unprofitable. On the contrary, a Research Joint Venture (RJV) helps to internalize the externality and further product market collusion always increases firms' profits. As a consequence, total welfare may be lower if R&D is made cooperatively.
dc.format application/pdf
dc.relation.isformatof http://www.worldscientific.com/doi/abs/10.1142/S0217590817500230
dc.relation.ispartof Singapore Economic Review, 2017
dc.rights , 2017
dc.subject.classification 33 - Economia
dc.subject.classification 334 - Formes d'organització i cooperació en l'economia
dc.subject.other 33 - Economics. Economic science
dc.subject.other 334 - Forms of organization and cooperation in the economy
dc.title On the effect of imperfect collusion on profitability and R&D
dc.type info:eu-repo/semantics/article
dc.date.updated 2018-10-26T18:21:33Z
dc.date.embargoEndDate info:eu-repo/date/embargoEnd/2075-01-01
dc.embargo 2075-01-01
dc.subject.keywords innovation
dc.subject.keywords Cartel
dc.rights.accessRights info:eu-repo/semantics/embargoedAccess

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