RJVs in Product Innovation and Cartel Stability

Lambertini, Luca ; Poddar, Sougata ; Sasaki, Dan (1998) RJVs in Product Innovation and Cartel Stability. Bologna: Dipartimento di Scienze economiche DSE, p. 17. DOI 10.6092/unibo/amsacta/5038. In: Quaderni - Working Paper DSE (272). ISSN 2282-6483.
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Abstract

We characterise the interplay between firms' decision in product development undertaken through a research joing venture (RJV), and the nature of their ensuing market behaviour. Participant firms in an RJV face a trade-off between saving the costs of product innovation by developing similar products to one another, e.g. by sharing most of the basic components of their products, and investing higher initial efforts in product innovation in order to develop more distinct products. We prove that the more the firms' products are distinct and thus less substitutable, the easier their collusion is to sustain in the marketing supergame, either in prices (Bertrand) or in quantities (Cournot). This gives rise to a non-monotone and discontinuous relationship between firms' product portfolio and their intertemporal preferences.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Poddar, Sougata
Sasaki, Dan
Keywords
R&D, supergame, collusion, optimal punishment, critical discount factor.
Subjects
ISSN
2282-6483
DOI
Deposit date
04 Apr 2016 09:32
Last modified
04 Apr 2016 09:32
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