König, MichaelD., Liu, X. and Zenou, Y. (2019). R&D Networks: Theory, Empirics and Policy Implications: Theory, Empirics, and Policy Implications Review of Economics and Statistics, 101(3):476--491.
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Affiliated author
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Publication year2019
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JournalReview of Economics and Statistics
We analyze a model of R\&D alliance networks where firms are engaged in R\&D collaborations that lower their production costs while competing on the product market. We provide a complete characterization of the Nash equilibrium and determine the optimal R\&D subsidy program that maximizes total welfare. We then structurally estimate this model using a unique panel of R\&D collaborations and annual company reports. We use our estimates to study the impact of targeted vs. non-discriminatory R\&D subsidy policies and empirically rank firms according to the welfare-maximizing subsidies they should receive.