Premium
Endogenous R&D Networks among Upstream Firms
Author(s) -
Kesavayuth Dusanee,
Manasakis Constantine,
Zikos Vasileios
Publication year - 2016
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2695
Subject(s) - upstream (networking) , incentive , welfare , economics , microeconomics , outcome (game theory) , social welfare , computer science , market economy , telecommunications , political science , law
This paper studies the endogenous formation of R&D networks among upstream firms and the welfare implications thereof. Both under an upstream price setting and an upstream quantity setting, it is shown that the complete R&D network emerges in equilibrium but only if spillovers are sufficiently low. Yet, under a quantity setting, the complete network arises within a larger range of spillovers. In both cases, however, there is a potential conflict between private incentives for R&D collaboration and societal ones. We discuss policy measures that may help to steer firms towards a more socially desirable outcome. Copyright © 2014 John Wiley & Sons, Ltd.