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Do research joint ventures serve a collusive function?
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Sovinsky, Michelle and Helland, Eric (2013) Do research joint ventures serve a collusive function? Working Paper. Coventry, UK: University of Warwick, Department of Economics. Warwick economics research papers series (TWERPS), Volume 2013 (Number 1030).
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Text (Working paper)
WRAP_twerp_1030_sovinsky.pdf - Published Version Download (473Kb) | Preview |
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
Every year thousands of firms are engaged in research joint ventures (RJV), where all knowledge
gained through R&D is shared among members. Most of the empirical literature assumes
members are non-cooperative in the product market. But many RJV members are
rivals leaving open the possibility that firms may form RJVs to facilitate collusion. We examine
this by exploiting variation in RJV formation generated by a policy change that affects
the collusive benefits but not the research synergies associated with a RJV. We use data on
RJVs formed between 1986 and 2001 together with firm-level information from Compustat
to estimate a RJV participation equation. After correcting for the endogeneity of R&D
and controlling for RJV characteristics and firm attributes, we find the decision to join is
impacted by the policy change. We also find the magnitude is significant: the policy change
resulted in an average drop in the probability of joining a RJV of 34% among telecommunications
firms, 33% among computer and semiconductor manufacturers, and 27% among
petroleum refining firms. Our results are consistent with research joint ventures serving a
collusive function.
| Item Type: | Working or Discussion Paper (Working Paper) |
|---|---|
| Subjects: | H Social Sciences > HB Economic Theory |
| Divisions: | Faculty of Social Sciences > Economics |
| Library of Congress Subject Headings (LCSH): | Research and development partnership , Business enterprises , Price fixing |
| Series Name: | Warwick economics research papers series (TWERPS) |
| Publisher: | University of Warwick, Department of Economics |
| Place of Publication: | Coventry, UK |
| Official Date: | 2013 |
| Volume: | Volume 2013 |
| Number: | Number 1030 |
| Number of Pages: | 57 |
| Status: | Not Peer Reviewed |
| Publication Status: | Published |
| Access rights to Published version: | Open Access (Creative Commons) |
| Funder: | Financial Economics Institute , Lowe Institute of Political Economy |
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