R&D Networks: Theory, Empirics and Policy Implications: Theory, Empirics, and Policy Implications

Michael D. König, Xiaodong Liu, Yves Zenou

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Abstract

We analyze a model of R&D alliance networks where firms are engaged in R&D collaborations that lower their production costs while competing on the product market. We provide a complete characterization of the Nash equilibrium and determine the optimal R&D subsidy program that maximizes total welfare. We then structurally estimate this model using a unique panel of R&D collaborations and annual company reports. We use our estimates to study the impact of targeted vs. non-discriminatory R&D subsidy policies and empirically rank firms according to the welfare-maximizing subsidies they should receive.
Original languageEnglish
Pages (from-to)476-491
Number of pages16
JournalReview of Economics and Statistics
Volume101
Issue number3
DOIs
Publication statusPublished - Jul 2019

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