Pro- versus Anti-Competitive Alliances
Preprint
- 10 September 2002
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
This paper considers the competitive effects of funding and collaboration alliances between established corporations and entrepreneurial potential rivals. We develop a formal setting to explore how in the presence of mutual agency conflicts, (i) cost efficiencies from resource sharing, (ii) the strength of strategic substitutabilities/replacement effects, and (iii) alliance design (arm's length vs tight relationships, financial security design) give rise to anti- or pro-competitive effects. The analysis provides novel insights into the competitive effects of alliances between rivals, the optimal design of alliances, and the differenent roles of equity participations.Keywords
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