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R &d and market sharing agreements

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Abstract

We analyze the formation of R &D alliances and market sharing (MS) agreements by which firms commit not to enter in each other’s territory in oligopolistic markets. We show that R &D alliance structures are stable only in the presence of MS agreements. Thus, long lasting R &D alliances could signal the existence of some MS agreement in the industry. We characterize the set of stable symmetric pairs of coalition structures with identical R &D and MS structure. In addition, we show the stability of a class of asymmetric pairs of coalition structures where the most efficient firms form both an R &D and a MS agreement while the other firms do not form any MS agreement but form two smaller R &D alliances. Even though MS agreements are detrimental for consumers, we show that the stable pairs of coalition structures are a better outcome for consumers than no cooperation at all.

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Authors and Affiliations

  1. CORE/LIDAM, UCLouvain, Voie du Roman Pays 34, 1348, Louvain-la-Neuve, Belgium

    Jérôme Dollinger, Ana Mauleon & Vincent Vannetelbosch

  2. CEREC, UCLouvain, Boulevard du Jardin Botanique 43, 1000, Brussels, Belgium

    Jérôme Dollinger

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  1. Jérôme Dollinger
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  2. Ana Mauleon
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  3. Vincent Vannetelbosch
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Correspondence to Ana Mauleon.

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We thank the editor, an associate editor and an anonymous referee for their valuable comments and suggestions to improve the paper. Ana Mauleon and Vincent Vannetelbosch are, respectively, Research Director and Senior Research Associate of the National Fund for Scientific Research (FNRS). Financial support from the Belgian French speaking community ARC project 15/20-072 of UCLouvain—Saint-Louis, and from the Fonds de la Recherche Scientifique—FNRS research grant T.0143.18 is gratefully acknowledged.

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Dollinger, J., Mauleon, A. & Vannetelbosch, V. R &d and market sharing agreements. Econ Theory (2024). https://doi.org/10.1007/s00199-024-01554-z

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