Gaëtan Fournier : gaetan.fournier[at]univ-amu.fr
Raghul Venkatesh : raghul.venkatesh[at]univ-amu.fr
This paper investigates the interplays between R&D cooperation and market sharing collusions among companies in an oligopoly environment. In our setting, firms are able to cooperate among each other by forming both R&D and market sharing coalitions before competing in quantities. Extending the stability notions developed by Hart and Kurz (1984), we propose a new stability concept for pairs of coalition structures. We provide a characterisation of symmetric pair of coalition structures, and consequently we establish the existence of stable pairs of R&D and market sharing agreements when both coalition structures are endogenous. This entails that market sharing agreements stabilise R&D coalition structures. Therefore, our model highlights that market sharing cooperation fosters the formation of R&D agreements. We prove that markets where there is a high heterogeneity between competitors in term of R&D efficiency are fertile grounds for the emergence of market sharing coalitions of moderate size. Finally, we highlight that market sharing coalitions are more likely to exist in market composed of more than two R&D coalitions.