Abstract
We study rival firms' incentives in quality-improving Research and
Development (R&D) networks. The analysis stresses the role of free
riding associated to collaboration, and three major consequences
emerge: R&D efforts decrease with the number of partners, networks
of alliances are over-connected as compared to the social optimum
and the profit-maximizing number of alliances is possibly non-monotonic
(decreasing then increasing) with respect to inverse measure of product
differentiation.
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