Proximity and R&D Cooperation between firms: Location, R&D and Output in an Oligopoly with Spillovers
AbstractThis paper aims at explaining how proximity between firms affects cooperation in R&D. For that purpose, it is proposed a three-stage game amongst three firms where each firm decides about location, R&D and output. Firms’ decision about location determines a R&D spillover, which is inversely related to the distance between firms. R&D output is assumed to be cost reducing and exhibit diminishing returns. Cooperation is only allowed in the R&D stage. Our results allow us to conclude that there is a positive relationship between R&D output equilibrium and the distance between firms when firms act independently. When firms cooperate in R&D, R&D output for a cooperating firm increases with the degree of information sharing between them, as well as with a reduction of the distance between cooperating firms. Firms’ decision about location is also affected by R&D activities: if R&D activities run independently, the clustering of firms only occurs for a convex spillover function; if R&D activities run cooperatively, clustering is always observed if there is an increased information sharing between firms. Keywords: Location, R&D cooperation, R&D spillovers
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Bibliographic InfoPaper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p177.
Date of creation: Aug 2004
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-09 (All new papers)
- NEP-BEC-2005-11-09 (Business Economics)
- NEP-COM-2005-11-09 (Industrial Competition)
- NEP-GEO-2005-11-09 (Economic Geography)
- NEP-MIC-2005-11-09 (Microeconomics)
- NEP-SOC-2005-11-09 (Social Norms & Social Capital)
- NEP-TID-2005-11-09 (Technology & Industrial Dynamics)
- NEP-URE-2005-11-09 (Urban & Real Estate Economics)
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