Econ 483_Lecture 18_Quality ladders_Competition policy

Q uality ladders competition policy rd joint ventures

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Unformatted text preview: on every processing unit sold, whether or not the processing unit embodied the Microsoft operating system. Such contracts led the manufacturers to use the Microsoft’ system instead s of a competitive one. Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures R&D joint ventures Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures Ex-ante mergers & R&D joint ventures Firms can merge their assets into a new …rm or their R&D e¤orts in a research joint venture. social bene…t: cost e¢ ciencies production by the most e¢ cient …rms, information disclosure, knowledge spillovers, elimination of duplication of e¤ort social harm: The number of substitute innovations is reduced. The competition ex-post in the product market is reduced; R&D activity is slowed down. The court balances cost e¢ ciencies vs any harm to competition. ! Such balance is called rule of reason. Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures Ex-ante mergers & R&D joint ventures Whether competition or a concentrated market promotes innovation depends on the nature of the innovative process the innovative environment etc Case 1: Competition encourages innovation. Competition in R&D induces …rms to overinvest (due to business stealing). We get innovations sooner & with higher probability. Case 2: The market concentration encourages innovation. High …xed costs can be avoided by merger or joint venture. Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures In textbooks Scotchmer, S., Innovation and Incentives, pages: 133, 135, 169-175 Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved....
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This note was uploaded on 03/16/2014 for the course ECON 483 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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