Research Joint Ventures and Cartelization of Industries

The aim of this paper is to investigate the impact of the firms’ behavior in the product market on their decisions at the R&D stage. We compare the consequences of the Stackelberg-type competition of two firms for the R&D investments with the situation of a cartelized industry under the assumption of quadratic cost functions. Numerical analysis shows that the lowest values of R&D efforts occur when the companies form a research joint venture. Moreover, greater R&D expenditures can be observed when a research joint venture is formed in a cartelized industry rather than under a Stackelberg-type duopoly.