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Author: | Kline, J. |
Title: | Research joint ventures and the cost paradox |
Journal: | International Journal of Industrial Organization
2000 : OCT, VOL. 18:7, p. 1049-1066 |
Index terms: | COMPETITION MARGINAL COSTING MARKET RESEARCH |
Language: | eng |
Abstract: | The author considers the impact of the cost paradox on the likelihood of cooperative firms to use a cost reducing Research Joint Venture (RJV) to increase research levels when spillovers are large. The cost paradox (CP) occurs whenever industry-wide cost reductions would lead to such intense competition that profits would fall. The author gives a restriction on cost reducing research which guarantees that an RJV will prefer marginal reductions in research to the noncooperative levels wherever CP would arise and spillovers are less than perfect. |
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