Upstream R&D networks
AbstractWe study the endogenous formation of upstream R&D networks in a vertically related industry. We find that, when upstream firms set prices, the complete network that includes all firms emerges in equilibrium. In contrast, when upstream firms set quantities, the complete network will arise but only if within-network R&D spillovers are sufficiently low, while if R&D spillovers are sufficiently high, a partial network arises. Interestingly, when upstream firms set prices, the equilibrium network maximizes social welfare, while a conflict between equilibrium and socially optimal networks is likely to occur when upstream firms set quantities.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 1201.
Date of creation: 15 Mar 2012
Date of revision:
Networks; R&D collaboration; upstream firms.;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-28 (All new papers)
- NEP-COM-2012-03-28 (Industrial Competition)
- NEP-CSE-2012-03-28 (Economics of Strategic Management)
- NEP-INO-2012-03-28 (Innovation)
- NEP-NET-2012-03-28 (Network Economics)
- NEP-SBM-2012-03-28 (Small Business Management)
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