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FIRM HETEROGENEITY AND THE PATTERN OF R&D COLLABORATIONS
Author(s) -
Billand Pascal,
Bravard Christophe,
Durieu Jacques,
Sarangi Sudipta
Publication year - 2019
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12789
Subject(s) - pairwise comparison , oligopoly , microeconomics , value (mathematics) , welfare , economics , industrial organization , business , social welfare , cournot competition , computer science , market economy , artificial intelligence , machine learning , political science , law
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 C70, L13, L20)