R&D investments under endogenous cluster formation.
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| Title: | R&D investments under endogenous cluster formation. |
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| Authors: | Dawid, Herbert1 (AUTHOR) hdawid@wiwi.uni-bielefeld.de, Hellmann, Tim1,2 (AUTHOR) t.hellmann@soton.ac.uk |
| Source: | Journal of Economic Behavior & Organization. Jun2020, Vol. 174, p253-283. 31p. |
| Subjects: | Investments, Desire, Equilibrium, Business enterprises, Oligopolies |
| Abstract: | We provide an innovative theory-based explanation for the positive relationship between firms' R&D intensity and their degree of R&D cooperation. We show that, when oligopolistic firms decide on long-term R&D investment before forming research clusters among competitors, investment incentives are increased by the desire to become a member of an attractive cluster. This can result in over-investment compared to the welfare optimum and compared to a scenario where research clusters are ex-ante fixed. Thereby, as a theoretical contribution, we fully characterize the equilibria of the unanimity game on cluster formation with heterogeneous firms. [ABSTRACT FROM AUTHOR] |
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| Database: | Engineering Source |
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