International R&D Networks |
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| Authors: | Lei Zu Baomin Dong Xin Zhao Jin Zhang |
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| Institution: | 1. Central University of Finance and Economics, China;2. School of International Trade and Economics, University of International Business and Economics, China;3. Department of Economics, University of British Columbia, Canada |
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| Abstract: | This paper considers the Goyal and Moraga‐Gonzalez (2001 ) model of strategic R&D collaboration networks in the open economy framework. The R&D is the d'Aspremont and Jacquemin (1988 ) process innovation and collaboration takes the form of research joint ventures (RJV) in which firms cooperate in R&D but compete in product markets. Countries decide whether to establish free‐trade links while firms decide whether and with whom to form RJVs. A double‐layer pairwise stability concept is introduced to characterize equilibrium network structures. In contrast with conventional wisdom, it is shown that global free trade generally reduces collaborative R&D levels. We give conditions for which pairwise stable R&D networks are welfare maximizing. Stability and efficiency are congruent when R&D cost is either too high or too low. A large public spillover effect is detrimental to an R&D network when trade networks are regional. |
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