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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
Contact details of provider: Web page: http://www.southerneconomic.org/

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  1. Sumit Joshi, 2000. "Networks of Collaboration in Oligopoly," Econometric Society World Congress 2000 Contributed Papers 0623, Econometric Society.
  2. Matthew O. Jackson, 2001. "Strongly Stable Networks," University of Oregon Economics Department Working Papers 2001-3, University of Oregon Economics Department, revised 15 Nov 2002.
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  4. ANDERSON, Simon & de PALMA, André & THISSE, Jacques-François, 1996. "Privatization and Efficiency in a Differentiated Industry," CORE Discussion Papers 1996045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Fjell, Kenneth & Heywood, John S., 2004. "Mixed oligopoly, subsidization and the order of firm's moves: the relevance of privatization," Economics Letters, Elsevier, vol. 83(3), pages 411-416, June.
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  9. Debashis Pal & Mark D. White, 1998. "Mixed Oligopoly, Privatization, and Strategic Trade Policy," Southern Economic Journal, Southern Economic Association, vol. 65(2), pages 264-281, October.
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  12. Poyago-Theotoky, Joanna, 1998. "R&D Competition in a Mixed Duopoly under Uncertainty and Easy Imitation," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 415-428, September.
  13. MAULEON, Ana & SEMPERE-MONERRIS, José J. & VANNETELBOSCH, Vincent, . "Networks of knowledge among unionized firms," CORE Discussion Papers RP 2055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Nett, Lorenz, 1994. "Why private firms are more innovative than public firms," European Journal of Political Economy, Elsevier, vol. 10(4), pages 639-653, December.
  15. Flavio Delbono & Vincenzo Denicolo, 1991. "Regulating Innovative Activity: the Role of a Public Firm," Working Papers 117, Dipartimento Scienze Economiche, Universita' di Bologna.
  16. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-37, December.
  17. Goyal, S. & Joshi, S., 2000. "Networks of Collaboration in Oligopoly," Econometric Institute Research Papers EI 9952-/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
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