Information Sharing and Cumulative Innovation in Business Networks

Gilles Saint-Paul

No 4116, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: How can we explain the success of cooperative networks of firms that share innovations, such as Silicon Valley or the Open Source community? This Paper shows that if innovations are cumulative, making an invention publicly available to a network of firms may be valuable if the firm expects to benefit from future improvements made by other firms. A cooperative equilibrium where all innovations are made public is shown to exist under certain conditions. Furthermore, such equilibrium does not rest on punishment strategies being followed after a deviation: it is optimal not to deviate regardless of other firm?s actions following a deviation. A cooperative equilibrium is more likely to arise, the greater the number of firms in the network. When R&D effort is endogenous, cooperative equilibria are associated with strategic complementarities between firms? research effort, which may lead to multiple equilibria.

Keywords: R&d; Cooperation; Innovation; Growth; Technical progress; Information sharing; Open source; Silicon valley; Cumulative knowledge (search for similar items in EconPapers)
JEL-codes: O30 (search for similar items in EconPapers)
Date: 2003-11
New Economics Papers: this item is included in nep-tid
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://cepr.org/publications/DP4116 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:4116

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP4116

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().