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The effect of entry on R&D networks

Author

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  • Emmanuel Petrakis
  • Nikolas Tsakas

Abstract

We investigate the effect of potential entry on the formation and stability of R&D networks considering farsighted firms. The presence of a potential entrant often alters the incentives of incumbents to collaborate. Incumbent firms may form an otherwise undesirable collaboration to deter entry of a new firm. Moreover, an incumbent may refrain from establishing an otherwise desirable collaboration, expecting to form a more profitable link with the entrant. Finally, potential entry may lead an inefficient incumbent to exit the market. Welfare analysis shows market and social incentives to be often misaligned. We propose a subsidy scheme that encourages welfare‐improving entry.

Suggested Citation

  • Emmanuel Petrakis & Nikolas Tsakas, 2018. "The effect of entry on R&D networks," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 706-750, September.
    • Handle: RePEc:bla:randje:v:49:y:2018:i:3:p:706-750
    DOI: 10.1111/1756-2171.12250
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    Cited by:

    1. Ioannou, Christos A. & Makris, Miltiadis & Ornaghi, Carmine, 2021. "R&D productivity and the nexus between product substitutability and innovation: Theory and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 135-151.
    2. Jing Li & Yulin Zhang, 2021. "More market awareness, more profit? Competitive environments, business expansions, and two‐sided markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 249-267, March.
    3. Ana Mauleon & Jose J. Sempere-Monerris & Vincent Vannetelbosch, 2023. "Limited Farsightedness in R &D Network Formation," Dynamic Games and Applications, Springer, vol. 13(2), pages 549-565, June.
    4. Dawid, Herbert & Hellmann, Tim, 2020. "R&D investments under endogenous cluster formation," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 253-283.
    5. Mauleon, Ana & Sempere-Monerris, Jose J. & Vannetelbosch, Vincent, 2023. "R&D network formation with myopic and farsighted firms," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 203-229.
    6. Sara Amoroso & Simone Vannuccini, 2019. "Teaming up with Large R&D Investors: Good or Bad for Knowledge Production and Diffusion?," JRC Working Papers on Corporate R&D and Innovation 2019-05, Joint Research Centre.
    7. Jérôme Dollinger & Ana Mauleon & Vincent Vannetelbosch, 2024. "R &d and market sharing agreements," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 78(3), pages 877-922, November.

    More about this item

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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