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Endogenous R&D Spillovers and Locational Choice

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  • Claudio Piga
  • Joanna Poyago-Theotoky

Abstract

We present a three-stage game where two firms choose location, R&D and price, under the assumption that R&D spillovers depend on firms' location. That is, the closer firms are to each other, the greater the benefit they receive from their rivals' efforts in quality-enhancing R&D. We show that the distance between firms' location increases with the degree of product differentiation. Further, we find that minimal quality differentiation always occurs. Finally, investment in R&D is positively associated with the degree of product differentiation

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Bibliographic Info

Paper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 0310.

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Date of creation: Oct 2003
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Handle: RePEc:san:crieff:0310

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Keywords: Endogenous spillovers; Quality-enhancing R&D; Location.;

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