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The Economics of Scientific Research Coalitions: Collaborative Network Formation in the Presence of Multiple Funding Agencies

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  • Paul A. David

    (Stanford University)

  • Louise C. Keely

    (University of Wisconsin)

Abstract

The paper develops a formal model of coalition-building (“network” formation) among research units that seek competitive funding from a supra-regional program, while also drawing support from their respective regional funding agencies. This approach enables one to ask whether there are stable (equilibrium) outcomes in the interactions among the several funding entities, and to investigate what those outcomes would imply for the evolving distribution of scientific performance within the entire region and its national sub-regions. This analysis is motivated by the absence of frameworks of analysis applicable to problems of design of public R&D funding arrangements in the European Union, and in other regional systems were independent programs of “federal and state” support for research co-exists First, a model is developed to analyze how collaborations are formed under different sets of funding rules of an international funding institution, starting with a fixed finite population of research units and an associated distribution of reputed quality, or scientific reputation.. Collaborations are formed in the expectation of attracting supra-national funding, following a specific ordering procedure; this gives rise to a repeated non-cooperative game of coalition (or collaboration) formation with the distribution of payoffs within the collaboration following to a fixed rule. Non- cooperative games of coalition formation developed by Bloch (1995), and Ray and Vohra (1999), provides a useful framework single-period framework. Following Keely (1999), this type of game is applied to a multi-period setting in which a distribution of coalitions is tracked, along with the levels of funding received. The latter are determined according to a rule comparing the distribution of reputations within and across collaborations. Alternative possible external funding rules are analyzed to determine how they impact upon collaboration formation, and the resulting evolution of the reputation distribution (as that will be affected by the allocation of funding). In the second part of the analysis, various combinations of national and supra-national funding regimes are examined, but all the rules considered stipulate that collaborations are funded as a whole, regardless of the number of members; and that their funding is determined by the absolute level of average reputation, or of the variance in reputation, rather than just the rankings of the proposed networks. The Nash equilibria associated with each of the stipulated funding regimes can be compared, and to characterize the outcomes, the paper examines these two moments of the endogenously determined distributions research “competence” (signaled by the reputation measures) within the entire ensemble of research units and its national partitions. A numerical simulation helps illustrate the nature of the conclusions for policy design that can be drawn from this style of analysis.

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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0502004.

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Length: 66 pages
Date of creation: 10 Feb 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0502004

Note: Type of Document - pdf; pages: 66
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Web page: http://128.118.178.162

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  1. Paul A. David, 2001. "From Keeping 'Nature's Secrets' to the Institutionalization of 'Open Science'," Working Papers 01006, Stanford University, Department of Economics.
  2. Katz, J. Sylvan & Martin, Ben R., 1997. "What is research collaboration?," Research Policy, Elsevier, vol. 26(1), pages 1-18, March.
  3. Debraj Ray & Rajiv Vohra, 1998. "A Theory of Endogenous Coalition Structures," Working Papers 98-1, Brown University, Department of Economics, revised Jan 1998.
  4. Maryann P. Feldman & Frank R. Lichtenberg, 1997. "The Impact and Organization of Publicly-Funded Research and Development in the European Community," NBER Working Papers 6040, National Bureau of Economic Research, Inc.
  5. Paula E. Stephan, 1996. "The Economics of Science," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1199-1235, September.
  6. Francis Bloch, 1995. "Endogenous Structures of Association in Oligopolies," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 537-556, Autumn.
  7. Sharp, Margaret, 1998. "Competitiveness and cohesion--are the two compatible?," Research Policy, Elsevier, vol. 27(6), pages 569-588, September.
  8. Debraj Ray & Rajiv Vohra, 2001. "Coalitional Power and Public Goods," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1355-1384, December.
  9. David ,P. A. & Geuna ,Aldo & Steinmueller ,W. Edward, 1995. "Additionality as a principle of European R & D funding," Research Memorandum 009, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  10. Alfonso Gambardella & Walter Garcia-Fontes, 1996. "Regional Linkages Through European Research Funding," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 4(2), pages 123-138.
  11. Alfonso Gambardella & Walter Garcia Fontes, 1994. "Regional linkages through European research funding," Economics Working Papers 97, Department of Economics and Business, Universitat Pompeu Fabra.
  12. David, Paul A, 1998. "Common Agency Contracting and the Emergence of "Open Science" Institutions," American Economic Review, American Economic Association, vol. 88(2), pages 15-21, May.
  13. Diana Hicks & J Sylvan Katz, 1996. "Science policy for a highly collaborative science system," Science and Public Policy, Oxford University Press, vol. 23(1), pages 39-44, February.
  14. Walter Garcia Fontes & Aldo Geuna, 1995. "The dynamics of research networks in Brite-Euram," Economics Working Papers 132, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 1995.
  15. Paula E. Stephan & Sharon G. Levin, 1997. "The Critical Importance of Careers in Collaborative Scientific Research," Revue d'Économie Industrielle, Programme National Persée, vol. 79(1), pages 45-61.
  16. Ashish Arora & Alfonso Gambardella, 1996. "Reputation and competence in publicly funded scientific research," Industrial Organization 9605002, EconWPA.
  17. Ashish ARORA & Paul DAVID & Alfonso GAMBARDELLA, 1998. "Reputation and Competence in Publicly Funded Science: Estimating the Effects on Research Group Productivity," Annales d'Economie et de Statistique, ENSAE, issue 49-50, pages 163-198.
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Cited by:
  1. Antonelli, Cristiano, 2003. "The Governance of Technological Knowledge: Strategies, Processes and Public Policies," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200306, University of Turin.
  2. Antonelli, Cristiano, 2002. "The Governance of Knowledge Commons," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200203, University of Turin.
  3. Mukherjee, Arijit & Stern, Scott, 2009. "Disclosure or secrecy? The dynamics of Open Science," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 449-462, May.

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