Paper by Michael König published in the RAND Journal of Economics
Michael König (Vrije Universiteit Amsterdam) and co-authors Chih-Sheng Hsieh (National Taiwan University) and Xiaodong Liu (University of Colorado Boulder) introduce an R&D network formation model where firms choose both R&D efforts and collaboration partners in their paper "Endogenous Technology Spillovers in R&D Collaboration Networks." The paper has been published in the RAND Journal of Economics.
Abstract
We introduce an R&D network formation model where firms choose both R&D efforts and collaboration partners. Neighbors in the network benefit from each other's R&D through technology spillovers, and there exists competition effects reflecting strategic substitutability in R&D. We provide a complete equilibrium characterization, and develop an estimation method that is computationally feasible for large networks. We then conduct an analysis of R&D collaboration subsidies, and find that a subsidy scheme targeting specific R&D collaborations can be more effective than a uniform subsidy, with a welfare gain up to five times larger than the cost of the subsidy.
Article citation
Chih-Sheng Hsieh, Michael D. König and Xiaodong Liu, ‘Endogenous Technology Spillovers in R&D Collaboration Networks', RAND Journal of Economics, published online, doi.org/10.1111/1756-2171.70010.