R&D Subsidies, Research Joint Ventures, and Industry Concentration

19 Pages Posted: 21 Jan 2002

See all articles by Sami F. Dakhlia

Sami F. Dakhlia

University of Tennessee, Chattanooga - Department of Finance

Flavio M. Menezes

University of Queensland - School of Economics

Akram Temimi

University of Alabama, Tuscaloosa

Date Written: September 27, 2002

Abstract

We show that the presumed incompatibility of R&D and competition in Spence (1984) is not fundamental, but hinges on a critical modeling choice. Specifically, we show that for a widely used class of R&D technology, that is, the functional form mapping R&D effort into cost reduction, the incompatibility disappears and Spence's subsidy-based solution becomes a viable alternative to Research Joint Ventures (RJVs). This is the case especially if RJVs carry with them a risk of cartelization, a risk we show to be particularly high for the models used in this literature, if only their simplifying restriction to symmetric firms is dropped.

Note: Previously titled "Duplication of R&D and Industry Concentration"

Keywords: Research and Development, Research Joint Ventures, Process Innovation Games

JEL Classification: D43, L1, O32

Suggested Citation

Dakhlia, Sami F. and Menezes, Flavio M. and Temimi, Akram, R&D Subsidies, Research Joint Ventures, and Industry Concentration (September 27, 2002). Available at SSRN: https://ssrn.com/abstract=297179 or http://dx.doi.org/10.2139/ssrn.297179

Sami F. Dakhlia

University of Tennessee, Chattanooga - Department of Finance ( email )

TN
United States

Flavio M. Menezes

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Akram Temimi (Contact Author)

University of Alabama, Tuscaloosa ( email )

Department of Economics, Finance and Legal Studies
P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-8961 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
236
Abstract Views
1,636
rank
176,663
PlumX Metrics