Firm Heterogeneity and the Pattern of R&D Collaborations

19 Pages Posted: 14 May 2020

See all articles by Pascal Billand

Pascal Billand

Jean Monnet University

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET

Jacques Durieu

University of Saint Etienne

Sudipta Sarangi

Virginia Polytechnic Institute & State University

Date Written: October 2019

Abstract

We consider an oligopoly setting in which firms form pairwise collaborative links in research and development with other firms. Each collaboration generates a value that depends on the identity of the firms that collaborate. First, we provide properties satisfied by pairwise equilibrium networks and efficient networks. Second, we use these properties in two types of situation: (1) there are two groups of firms, and the value of a collaboration is higher when firms belong to the same group; (2) some firms have more innovative capabilities than others. These two situations provide clear insights about how firms' heterogeneity affects both equilibrium and efficient networks. We also show that the most valuable collaborative links do not always appear in equilibrium, and a public policy that increases the value of the most valuable links may lead to a loss of social welfare.

JEL Classification: C70, L13, L20

Suggested Citation

Billand, Pascal and Bravard, Christophe and Durieu, Jacques and Sarangi, Sudipta, Firm Heterogeneity and the Pattern of R&D Collaborations (October 2019). Economic Inquiry, Vol. 57, Issue 4, pp. 1896-1914, 2019, Available at SSRN: https://ssrn.com/abstract=3596389 or http://dx.doi.org/10.1111/ecin.12789

Pascal Billand (Contact Author)

Jean Monnet University ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Jacques Durieu

University of Saint Etienne ( email )

6, rue basse des rives
Saint Etienne, 42023
France

Sudipta Sarangi

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

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