R&D Networks: Theory, Empirics and Policy Implications

86 Pages Posted: 2 Jun 2014

See all articles by Michael König

Michael König

University of Zurich - Department of Economics

Xiaodong Liu

University of Colorado at Boulder - Department of Economics

Yves Zenou

Monash University - Department of Economics; Stockholm University; Research Institute of Industrial Economics (IUI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

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Date Written: March 2014

Abstract

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.

Keywords: key firms, optimal subsidies, R&D networks

JEL Classification: D85, L24, O33

Suggested Citation

König, Michael and Liu, Xiaodong and Zenou, Yves, R&D Networks: Theory, Empirics and Policy Implications (March 2014). CEPR Discussion Paper No. DP9872. Available at SSRN: https://ssrn.com/abstract=2444893

Michael König (Contact Author)

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

Xiaodong Liu

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States

HOME PAGE: http://spot.colorado.edu/~xiaodong/

Yves Zenou

Monash University - Department of Economics ( email )

Australia

Stockholm University ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

Research Institute of Industrial Economics (IUI) ( email )

P.O. Box 5501
S-114 85 Stockholm
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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