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R&D Collaboration Networks in Mixed Oligopoly

  • Vasileios Zikos

    (Department of Economics, University of Surrey, Guildford, Surrey, GU2 7XH, U.K.)

We develop a model of endogenous network formation in order to examine the incentives for R&D collaboration in a mixed oligopoly. Our analysis reveals that the complete network, where each firm collaborates with all others, is uniquely stable. When R&D subsidies are not available, in addition to the complete network, the private partial and the private-hub star networks are Pareto efficient. However, the complete network becomes the unique Pareto efficient network when R&D is subsidized. This result is in contrast with earlier contributions in private oligopoly where under strong market rivalry a conflict between stable and efficient networks is likely to occur. It also highlights the role of a public firm as policy instrument in aligning individual incentives for collaboration with the objective of efficiency, independently of whether R&D subsidies are provided by the regulator.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 77 (2010)
Issue (Month): 1 (July)
Pages: 189-212

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Handle: RePEc:sej:ancoec:v:77:1:y:2010:p:189-212
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