Research clusters: How public subsidies matter

This paper investigates the factors underlying the emergence of Research Cluster (RC), i.e. cooperation (or coordination of research efforts) through spatial proximity between public and private research teams. A ‘public lab’ and a ‘private lab’ interact in a two-stage game to decide on ‘location’ and ‘research effort’. A high level of public subsidies associated to a low asymmetry in the ‘valorisation capability’ between both labs is necessary for the formation of a cluster. We find that RC performs better than non-cooperation in terms of research efforts in a ‘public lab’ (but not in a ‘private lab’) and output gains that can be appropriated by each lab