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The evolution of R&D networks

  • Dawid, Herbert

    (Center for Mathematical Economics, Bielefeld University)

  • Hellmann, Tim

    (Center for Mathematical Economics, Bielefeld University)

We study the evolution of R&D networks in a Cournot model where firms may lower marginal costs due to bilateral R&D collaborations. Stochastically stable R&D networks exhibit the dominant group architecture, and, contrary to the existing literature, generically unique predictions about the size of the dominant group can be obtained. This size decreases monotonically with respect to the cost of link formation and there exists a lower bound on the size of the dominant group for non-empty networks. Stochastically stable networks are always inefficient and an increase in linking costs has a non-monotone effect onaverage industry profits.

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Paper provided by Center for Mathematical Economics, Bielefeld University in its series Center for Mathematical Economics Working Papers with number 467.

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Date of creation: 17 Apr 2014
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Handle: RePEc:bie:wpaper:467
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  1. Sanjeev Goyal & Sumit Joshi, 2006. "Unequal connections," International Journal of Game Theory, Springer, vol. 34(3), pages 319-349, October.
  2. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. Bastian Westbrock, 2010. "Natural concentration in industrial research collaboration," RAND Journal of Economics, RAND Corporation, vol. 41(2), pages 351-371.
  4. Dawid, Herbert, 1999. "On the stability of monotone discrete selection dynamics with inertia," Mathematical Social Sciences, Elsevier, vol. 37(3), pages 265-280, May.
  5. Joel BAUM & Robin COWAN & Nicolas JONARD, 2009. "Network-independent partner selection and the evolution of innovation networks," Working Papers of BETA 2009-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  6. Sumit Joshi, 2000. "Networks of Collaboration in Oligopoly," Econometric Society World Congress 2000 Contributed Papers 0623, Econometric Society.
  7. König, Michael D. & Battiston, S. & Napoletano, M. & Schweitzer, F., 2011. "Recombinant knowledge and the evolution of innovation networks," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 145-164, August.
  8. Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Dawid, Herbert & MacLeod, W. Bentley, 2008. "Hold-up and the evolution of investment and bargaining norms," Games and Economic Behavior, Elsevier, vol. 62(1), pages 26-52, January.
  10. König, Michael D. & Battiston, Stefano & Napoletano, Mauro & Schweitzer, Frank, 2012. "The efficiency and stability of R&D networks," Games and Economic Behavior, Elsevier, vol. 75(2), pages 694-713.
  11. 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.
  12. Tim Hellmann, 2013. "On the existence and uniqueness of pairwise stable networks," International Journal of Game Theory, Springer, vol. 42(1), pages 211-237, February.
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