Abstract
We develop a model of strategic networks that captures two distinctive features of interfirm collaboration: bilateral agreements and nonexclusive relationships. Our analysis highlights the relationship between market competition, firms' incentives to invest in R&D, and the architecture of collaboration networks. In the absence of firm rivalry, the complete network, where each firm collaborates with all others, is uniquely stable, industry-profit maximizing, and efficient. By contrast, under strong market rivalry the complete network is stable, but intermediate levels of collaboration and asymmetric networks are more attractive from a collective viewpoint. This suggests that competing firms may have excessive incentives to form collaborative links.
Original language | English |
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Pages (from-to) | 686-707 |
Number of pages | 22 |
Journal | Rand Journal of Economics |
Volume | 32 |
Issue number | 4 |
DOIs | |
Publication status | Published - Dec 2001 |