Competing R&D Joint Ventures in Cournot oligopoly with spillovers

Abstract

This paper considers competition between R&D cartels, whereby prospective Cournot competitors coordinate their R&D decisions in order to maximize joint profit. It studies how R&Dactivity, aggregate profit, consumer surplus, and social welfare vary as the number of competing cartels varies. It also compares equilibrium with second bestR&D, and discusses the policy implications of the results. The results show that the effects of R&D cartel competition depend on the welfare criterion adopted and on whether there are cooperative synergies or not.