Endogenous technology cycles in dynamic R&D networks

Michael D. König and Tim Rogers

European Economic Review, 2023, vol. 158, issue C

Abstract: We study the coevolutionary dynamics of knowledge creation and diffusion with the formation of R&D collaboration networks. The novel examination of a large R&D collaboration network over several decades reveals a pronounced oscillatory (cyclical) pattern in the R&D collaboration intensity, which is not captured by existing theoretical studies. Here, we propose a new model of R&D network formation in which firms form R&D collaborations with others possessing a complementary portfolio of technologies. Innovations and knowledge spillovers alter the composition of these portfolios over time, leading to changes in the network of R&D collaborations. We show that our model is not only able to explain the emergence of oscillatory dynamics in R&D networks, but also has important policy implications. First, we demonstrate that there exists a critical threshold level for spillovers between R&D collaborating firms that must be exceeded for R&D collaborations to effectively contribute to knowledge creation in the economy. The threshold indicates that policies promoting collaborative R&D can only be successful in fostering innovations if they are substantial enough so that spillovers are above the threshold. Second, policies strengthening competition in R&D networks are found to promote oscillatory fluctuations, potentially destabilizing the network.

Keywords: R&D networks; Innovation; Network formation; Technology cycles; Competition (search for similar items in EconPapers)
JEL-codes: D85 L24 O32 O33 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:158:y:2023:i:c:s0014292123001605

DOI: 10.1016/j.euroecorev.2023.104531

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