AbstractWe develop a model of strategic networks that captures two distinctive features of interfirm collaboration: bilateral agreements and nonexclusive relationships. Our analysis highlights the relationship between market competition, firms' incentives to invest in R&D, and the architecture of collaboration networks. In the absence of firm rivalry, the complete network, where each firm collaborates with all others, is uniquely stable, industry-profit maximizing, and efficient. By contrast, under strong market rivalry the complete network is stable, but intermediate levels of collaboration and asymmetric networks are more attractive from a collective viewpoint. This suggests that competing firms may have excessive incentives to form collaborative links. This discussion paper has resulted in a publication in The Rand Journal of Economics , 2001, 32(4), 686-707.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-075/1.
Date of creation: 14 Sep 2000
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strategic alliances; networks; research and development;
Other versions of this item:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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- NEP-ALL-2000-10-23 (All new papers)
- NEP-INO-2000-10-23 (Innovation)
- NEP-TID-2000-10-23 (Technology & Industrial Dynamics)
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