Research joint ventures and price collusion : joint analysis of the impact of R&D subsidies and antitrust fines

This paper analyzes the joint design of innovation and competition policy. It focuses on collusion sustainability changes due to implementation of antitrust fines and R&D subsidies in an extension of a model by Miyagiwa (2009). Generic subsidies for R&D are found not to facilitate collusion, while additional subsidization to research joint ventures (RJVs) can be collusion facilitating. We also find that proper joint design of RJV subsidies and antitrust fines may cancel out the negative effects of such subsidization. Comparison of welfare effects shows that in some cases additional RJVpromoting subsidies may induce the choice of RJV together with increasing social welfare.