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on Technology and Industrial Dynamics |
| By: | Prokop, Jacek; Karbowski, Adam |
| Abstract: | The objective of this paper is to investigate the impact of R&D cooperation on cartel formation in the product market. The R&D investments that precede the production process are aimed at the reduction of the unit manufacturing costs, and could create positive externalities for the potential competitors. In contrast to the preceding literature, we assume that the competition between firms on the product market takes place according to the Stackelberg leadership model. For simplicity we focus on the case of duopoly. Numerical analysis shows that a closer cooperation at the R&D stage may strengthen the incentives to create a cartel in the product market. -- |
| Keywords: | R&D cooperation of firms,industry cartelization,Stackelberg competition |
| JEL: | O31 L41 L13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201341&r=tid |
| By: | David R. Gallagher (Macquarie Graduate School of Management); Katja Ignatieva (Australian School of Business, University of New South Wales); James McCulloch (Quantitative Finance Research Centre, University of Technology, Sydney) |
| Abstract: | This paper examines market concentration and stock returns on the Australian Securities Exchange. We find that dominant companies operating in concentrated industries in Australia are able to generate significant risk-adjusted excess stock returns and excess profits on sales (monopoly rents). Our results for Australian data are opposite to that found by Hou and Robinson (2006) for United States market data. Hou and Robinson reason that U.S. firms which operate in concentrated industries are insulated from competitive pressures, have lower levels of innovation (Arrow (1962)) and therefore experience lower profitability and stock returns. The high stock returns of dominant companies in Australia is consistent with Schumpeter?s (1942) theory of innovation where monopoly excess profits are necessary to fund corporate innovation. We hypothesize that the apparent contradiction of our results compared with Hou and Robinson (2006) for the United States market is resolved by an examination of the differences in size and competition in U.S. and Australian industries and the consequent differential ability of dominant companies in the two countries to generate monopoly rents. |
| Date: | 2013–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:rpaper:334&r=tid |