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R&D Networks: Theory, Empirics and Policy Implications

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  • König, Michael
  • Liu, Xiaodong
  • Zenou, Yves

Abstract

We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9872.

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Date of creation: Mar 2014
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Handle: RePEc:cpr:ceprdp:9872

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Keywords: key firms; optimal subsidies; R&D networks;

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