Endogenous Technology Spillovers in R&D Collaboration Networks | CU Experts

Overview

ABSTRACTWe 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.