R&D networks and absorptive capacity in a Salop model
Author(s)
Di Dio, Fabio
Date Issued
2019
Type
article
Volume
73
Issue
2
Start Page
123
End Page
128
Journal
Abstract
© 2019 The paper investigates the incentives of Salop-type oligopolistic firms to cooperate and the architecture of the resulting collaboration networks. We find that when spillovers are exogenous, firm profits are not affected by the network structure. On the contrary, with endogenous spillovers (absorptive capacity) firms tend to form less dense networks. We also seek out the architecture of socially efficient networks, showing that social welfare is maximised in the complete network. Also, given the network structure we conclude that a Salop industry could be characterized by a general tendency to under-connection.