Monday, May 4, 2009
Posted by D. Daniel Sokol
Richard Ruble (EMLYON Business School) and Bruno Versaevel (EMLYON Business School) have written on Market Share, R&D Cooperation, and EU Competition Policy.
ABSTRACT: Current EU policy exempts horizontal R&D agreements from antitrust concerns when the combined market shares of participants are low enough. This paper argues that existing theory does not support limiting the exemption to low market shares. This is done by introducing a set of non-innovating outside firms to the standard framework to assess what link might exist between the market share of innovating firms and the product market benefits of cooperation. With R&D output choices, the market share criterion, while it rules out the most socially harmful R&D cooperation agreements, also hinders the most beneficial ones. With R&D input choices, cooperation may actually be desirable in concentrated industries, and harmful in more competitive ones. If R&D cooperation does have anti-competitive effects in product markets, it seems that these are therefore best addressed by other tools than market share criteria.