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R&D networks: theory, empirics and policy implications

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  • Michael D. König
  • Xiaodong Liu
  • Yves Zenou

Abstract

We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy.

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Paper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 142.

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Date of creation: Mar 2014
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Handle: RePEc:zur:econwp:142

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Keywords: R&D networks; key firms; optimal subsidies;

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