RJVs and Price Collusion under Endogenous Product Differentiation.

The authors characterize the interplay between firms' decisions in terms of either horizontal or vertical product differentiation and their ensuing price behavior, be that collusive or not. They prove the existence of a non-monotone relationship between firms' decisions at the development stage and their intertemporal preferences as well as consumers' willingness to pay. Moreover, the authors prove that firms' R&D decisions have no bearings on collusion stability in the vertical differentiation setting, while cooperation in the development stage destabilizes collusion in the horizontal differentiation setting.