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Journal Article

Research Joint Ventures and R&D Cartels

Morton I. Kamien, Eitan Muller and Israel Zang
The American Economic Review
Vol. 82, No. 5 (Dec., 1992), pp. 1293-1306
Stable URL: http://www.jstor.org/stable/2117479
Page Count: 14
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Research Joint Ventures and R&D; Cartels
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Abstract

We analyze the effects of R&D cartelization and research joint ventures on firms that engage in either Cournot or Bertrand competition in their product market. Research efforts, which precede production, are directed to reducing unit cost and are subject to various degrees of spillovers. It is shown that creating a competitive research joint venture reduces the equilibrium level of technological improvement and increases equilibrium prices compared to when firms conduct R&D independently. A research joint venture that cooperates in its R&D decisions yields the highest consumer plus producer surplus under Cournot competition and, in most cases, under Bertrand competition.

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