Economic returns in forming stable R&D networks

Abstract

The aim of this paper is to study the individual and social benefits behind constructing stable R&D networks. We find that the equilibrium outcomes of a stable network are related to the number of competitors. As they increase, the individual outcomes and the total welfare decrease. This implies that in the individual and social perspectives, small stable networks are more desirable than the large ones. Furthermore, when comparing the stability of the components of a network with a complete network, we conclude two main observations. The first observation shows that the stability of the components of a network does not necessarily guarantee a stable overall network. The second observation suggests that firms prefer to be part of a complete network rather than part of a stable component of a network. This preference depends on the profit of firms where it is maximized when firms are belong to the complete network.

International R&D Partnerships Between Companies: A Computational Study

“…The paper also discusses the consistency of our empirical results with the theoretical results of R&D cooperation (e.g., Alghamdi [1], D'Aspremont and Jacquemin [7], Deroian [8], Goyal and Moraga-Gonzalez [12], Goyal and Joshi [13], and Westbrock [37]). Among the various models applied in R&D, the authors studied the incentives for companies to cooperate in R&D and the potential consequences for other economic factors.…”

“…As well as the importance of networks in identifying profitable structures for all companies. There are several studies that have used the network framework to study the impact of R&D cooperation on economic outcomes (e.g., Alghamdi [1], Deroian [8], and Westbrock [37]).…”

“…Improving and increasing products and reducing production costs are key objectives of companies' cooperation. In addition to reducing the value of investments that decrease with the increase of the number of cooperative agreements that include many companies (Alghamdi [1], Goyal and Moraga-Gonzalez [12], and Silipo [31]). However, there are obstacles that may limit the benefit behind investments and cooperation of companies in R&D; for example, transaction cost and knowledge flow (R&D spillovers).…”

Maximum total welfare versus growth of R&D networks

“…For example, Goyal and Moraga-Gonzalez found that the low density network G 3 is stable for small values of the R&D spillover (see Figure 4 for the list of asymmetric networks with three firms). e Regarding to equation (11), see the equilibria under the symmetric networks in the Appendix.…”