Abstract
This paper introduces a structural model for the coevolution of networks and
behavior. We characterize the equilibrium of the underlying game and adopt the
Bayesian Double Metropolis-Hastings algorithm to estimate the model. We further extend the model to incorporate unobserved heterogeneity and show that
ignoring unobserved heterogeneity can lead to biased estimates in simulation
experiments. We apply the model to study R&D investment and collaboration
decisions in the chemical and pharmaceutical industry and find a positive
knowledge spillover effect. Our model also provides a tractable framework for a
long-run key player analysis.
Original language | English |
---|---|
Pages (from-to) | 355-367 |
Journal | Review of Economics and Statistics |
Volume | 104 |
Issue number | 2 |
DOIs | |
Publication status | Published - Mar 2022 |