We develop a model of strategic networks in order to analyze how trade unions will affect the stability and efficiency of R&D collaboration networks in an oligopolistic industry with three firms. Whenever firms settle wages, the complete network is always pairwise stable and the partially connected network is stable if and only if spillovers are large enough. If spillovers are small, the complete network is the efficient network; otherwise, the efficient network is the partially connected network. Thus, a conflict between stability and efficiency may occur: efficient networks are pairwise stable, but the reverse is not true. Strong stability even reinforces this conflict. However, once unions settle wages such conflict disappears: the complete network is the unique pairwise and strongly stable network and is the efficient network whatever the spillovers.
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number
2004071.
Find related papers by JEL classification: C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Sanjeev Goyal & Alexander Konovalov & Jose Luis Moraga-Gonzalez, 2003.
"Hybrid R&D,"
Economics Discussion Papers
564, University of Essex, Department of Economics.
[Downloadable!]
Other versions:
Goyal, S. & Konovalov, A. & Moraga-Gonzalez, J.L., 2003.
"Hybrid R&D,"
Econometric Institute Report
EI 2003-34 Revision_Date:, Erasmus University Rotterdam, Econometric Institute.
[Downloadable!]
Dutta, Bhaskar & Mutuswami, Suresh, 1996.
"Stable Networks,"
Working Papers
971, California Institute of Technology, Division of the Humanities and Social Sciences.
[Downloadable!]
Goyal, S. & Moraga-Gonzalez, J.L., 2000.
"R&D Networks,"
Econometric Institute Report
EI 2000-26A Revision_Date, Erasmus University Rotterdam, Econometric Institute.
[Downloadable!]
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