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R&D Networks: Theory, Empirics and Policy Implications

  • Michael D. Koenig


    (Stanford University)

  • Xiaodong Liu


    (University of Colorado)

  • Yves Zenou


    (Stockholm University)

We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy.

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Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 13-027.

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Date of creation: Feb 2014
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Handle: RePEc:sip:dpaper:13-027
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