The thesis comprises three essays which examine firm behaviour in the context of investing to acquire market power through developing or using new technology. In the first essay (chapter 2) we analyze how competition in the market for a new product innovation affects the formation and size of Research Joint Ventures (RJVs). Research efforts are directed at acquiring the patent for the technology to produce a new product. Firms conducting research benefit from cooperation through the creation of synergies which increases the probability of innovating. However, cooperation also reduces the reward to innovation since firms must share the revenues from the post-innovation product market. We show that market performance can be improved if RJVs include ancillary restraints which limit future competition among members. This occurs if the deadweight loss experienced in the product market is outweighed by the elimination of duplicative research. For industries with a sufficiently large number of firms, only a unique RJV size can exist in equilibrium. However, for small industry sizes multiple equilibria can exist. Furthermore, the size of the RJV relative to the size of the industry, increases in the amount of synergies made possible from cooperation. When the social surplus from the innovation exceeds the monopoly rent, too much cooperation among firms may occur in equilibrium.; The second essay (chapter 3) identifies conditions where cooperative behaviour in research and development improves market performance in a differential game where firms sell differentiated products over time. Research serves to reduce marginal production costs and increases a stock of knowledge common to an industry. We analyze and compare three different scenarios; (i) firms cooperate in R&D by forming a Research Joint Venture which maximizes joint profits; (ii) firms compete in R&D using feedback strategies; and (iii) firms compete in R&D using open-loop strategies. In the steady-state, cooperative R&D exceeds competitive R&D when the spillover rate is above a certain threshold. This threshold is largest when products are very close substitutes and the discount rate is large. Given the amount of product differentiation there exists a range of spillovers for which cooperation improves market performance at every moment in time. For spillovers greater than this range cooperation improves market performance in the steady-state but perhaps not over the entire time horizon. R&D competition in feedback strategies more closely approximates the cooperative solution than competition in open-loop strategies.; In the final essay (chapter 4) we examine and compare the effects of a seller concealing more or less information during the course of an auction. The auction allows firms to bid for an asset which they must acquire before they can use the technology they have developed from previous R&D. We show that a firm benefits from jump bidding only if its distribution of valuations is discontinuous and if some information, such as the identity of the bidders or the amounts of all valid bids except the highest, is concealed during the course of the bidding. The more information that a seller conceals, the higher a bidder is willing to jump bid in order to signal its valuation and the larger is the set of jump bid equilibria. Finally, we show that the expected revenue of the seller decreases when a jump bid equilibrium exists.
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