Article in a conference proceedings
The efficiency and evolution of R&D Networks
12th ISS International Conference
KÖNIG Michael D - Department of Economics (Author)
BATTISTON Stefano - Centre d'analyse et de mathématique sociale (Author)
NAPOLETANO Mauro - Observatoire français des conjonctures économiques (Author)
SCHWEITZER Frank - Chair of Systems Design (Author)
International Joseph A. Schumpeter Society
1 - 53 p.
Conferance name
ISS International Conference
Conference date(s)
2008-07-02 / 2008-07-05
Conference place
Rio de Janeiro, BRAZIL
R&D networks, technology spillovers, network efficiency, network formation
This work introduces a new model to investigate the efficiency and evolution of networks of firms exchanging knowledge in R&D partnerships. We first examine the efficiency of a given network structure from the point of view of maximizing total profits in the industry. We show that the efficient network structure depends on the marginal cost of collaboration. When the marginal cost is low, the complete graph is efficient. However, a high marginal cost implies that the efficient network is sparser and has a core-periphery structure. Next, we examine the evolution of the network structure when the decision on collaborating partners is decentralized. We show the existence of multiple equilibrium structures which are in general inefficient. This is due to (i) the path dependent character of the partner selection process, (ii) the presence of knowledge externalities and (iii) the presence of severance costs involved in link deletion. Finally, we study the properties of the emerging equilibrium networks and we show that they are coherent with the stylized facts on R&D networks.