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The efficiency and stability of R&D networks

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  • König, Michael D.
  • Battiston, Stefano
  • Napoletano, Mauro
  • Schweitzer, Frank

Abstract

We investigate the efficiency and stability of R&D networks in a model with network-dependent indirect spillovers. We show that the efficient network structure critically depends on the marginal cost of R&D collaborations. When the marginal cost is low, the complete graph is efficient, while high marginal costs imply that the efficient network is asymmetric and has a nested structure. Regarding the stability of network structures, we show the existence of both symmetric and asymmetric equilibria. The efficient network is stable for small industry size and small cost. In contrast, for large industry size, there is a wide region of cost in which the efficient network is not stable. This implies a divergence between efficiency and stability in large industries.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 75 (2012)
Issue (Month): 2 ()
Pages: 694-713

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Handle: RePEc:eee:gamebe:v:75:y:2012:i:2:p:694-713

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Web page: http://www.elsevier.com/locate/inca/622836

Related research

Keywords: R&D networks; Knowledge recombination; Indirect spillovers; Network efficiency; Network formation;

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References

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Citations

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Cited by:
  1. Herbert Dawid & Tim Hellmann, 2012. "The Evolution of R&D Networks," Working Papers 467, Bielefeld University, Center for Mathematical Economics.
  2. Stefania Vitali & Stefano Battiston & Mauro Gallegati, . "Financial fragility and distress propagation in a network of regions," Working Papers ETH-RC-12-016, ETH Zurich, Chair of Systems Design.
  3. Michael D. König & Xiaodong Liu & Yves Zenou, 2014. "R&D networks: theory, empirics and policy implications," ECON - Working Papers 142, Department of Economics - University of Zurich.
  4. Sudipta Sarangi & Pascal Billand & Christophe Bravard & Jacques Durieu, . "Efficient networks for a class of games with global spillovers," Departmental Working Papers 2013-06, Department of Economics, Louisiana State University.
  5. Mario V.Tomasello & Mauro Napoletano & Antonio Garas & Franck Schweitzer, 2013. "The rise and fall of RD networks," Documents de Travail de l'OFCE 2013-15, Observatoire Francais des Conjonctures Economiques (OFCE).
  6. Mohamed Belhaj & Sebastian Bervoets & Frédéric Deroïan, 2013. "Network Design under Local Complementarities," Working Papers halshs-00796487, HAL.
  7. Stuart McDonald & Mohamad Alghamdi & Bernard Pailthorpe, 2012. "The Emergence of a Small World in a Network of Research Joint Ventures," Discussion Papers Series 469, School of Economics, University of Queensland, Australia.

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