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Düsseldorf Institute for Competition Economics (DICE), University of Düsseldorf >
DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE) >
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http://hdl.handle.net/10419/52685
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| Title: | | Entry deterrence through cooperative R&D over-investment  |
| Authors: | | Christin, Clémence |
| Issue Date: | | 2011 |
| Series/Report no.: | | DICE discussion paper 38 |
| Abstract: | | In this paper, we highlight new conditions under which R&D agreements may have anti-competitive effects. We focus on cases where two firms compete with each other and with a competitive fringe. R&D activities need a specific input available to all firms on a common market, the price of which increases with demand for the input. In such a context, if a firm increases its R&D expenses, it increases the cost of R&D for its rivals. This induces exit from the fringe and may increase the final price. Therefore, by contrast to the case where the cost of R&D for one firm is independent of its rivals' R&D decisions, cooperation between strategic firms on the upstream market may induce more R&D by strategic firms, in order to exclude firms from the fringe and increase the final price. |
| Subjects: | | Competition policy Research and Development Agreements Collusion Entry deterrence |
| JEL: | | L13 L24 L41 |
| ISBN: | | 978-3-86304-037-6 |
| Document Type: | | Working Paper |
| Appears in Collections: | | DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE)
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