The efficiency and stability of R&D networks

doi:10.1016/j.geb.2011.12.007

Games and Economic Behavior

Volume 75, Issue 2, July 2012, Pages 694-713

https://doi.org/10.1016/j.geb.2011.12.007 Get rights and content

Abstract

We investigate the efficiency and stability of R&D networks in a model with network-dependent indirect spillovers. We show that the efficient network structure critically depends on the marginal cost of R&D collaborations. When the marginal cost is low, the complete graph is efficient, while high marginal costs imply that the efficient network is asymmetric and has a nested structure. Regarding the stability of network structures, we show the existence of both symmetric and asymmetric equilibria. The efficient network is stable for small industry size and small cost. In contrast, for large industry size, there is a wide region of cost in which the efficient network is not stable. This implies a divergence between efficiency and stability in large industries.

Highlights

► We model R&D collaboration networks with network-dependent indirect spillovers. ► We study which network architectures are efficient and/or stable. ► The marginal cost of collaborations and the industry size play a critical role. ► For intermediate costs, the efficient network has an asymmetric and nested structure. ► In large industries, efficient networks are not stable.

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The efficiency and stability of R&D networks

Abstract

Highlights

Europ. J. Oper. Res.

Linear Algebra Appl.

Linear Algebra Appl.

Soc. Netw.

Games Econ. Behav.

J. Econ. Behav. Organ.

Res. Econ.

J. Health Econ.

Games Econ. Behav.

Res. Pol.

J. Econ. Theory

J. Econ. Theory

J. Econ. Behav. Organ.

Linear Algebra Appl.

Linear Algebra Appl.

Res. Pol.

Collaboration networks, structural holes, and innovation: A longitudinal study

Admin. Sci. Quart.

A noncooperative model of network formation

Econometrica

Whoʼs who in networks. Wanted: The key player

Econometrica

Definitions of equilibrium in network formation games

Int. J. Game Theory

On the spectral radius of connected graphs

Publ. Inst. Math.

Structural Holes: The Social Structure of Competition

Pairwise-stability and Nash equilibria in network formation

Int. J. Game Theory

Principal eigenvectors of irregular graphs

Electron. J. Linear Algebra

Innovation and learning: The two faces of R&D

Econ. J.