Integrating Competition Policy and Innovation Policy: The Case of R&D Cooperation

This paper considers the integration of competition policy and innovation policy in the context of R&D cooperation. An explicit comparison of the welfare losses under ex-ante and ex-post R&D cooperation reveals differing incentives to undertake R&D in both regimes. The strength of these incentives is related to the degree of product market competition. We show that there is a clear relationship between the degree of competition in the product market and the relative performance of firms under ex-ante and ex-post cooperation. We derive implications for the design of competition policy rules.