RJVs in Product Innovation and Cartel Stability

Lambertini, Luca ; Poddar, Sougata ; Sasaki, Dan (1998) RJVs in Product Innovation and Cartel Stability. DOI 10.6092/unibo/amsacta/767.
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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 inno-vation 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
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:04
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