Limited Farsightedness in R &D Network Formation

Ana Mauleon, José Sempere-Monerris and Vincent Vannetelbosch

Dynamic Games and Applications, 2023, vol. 13, issue 2, No 8, 549-565

Abstract: Abstract We adopt the horizon-K farsighted set of Herings, Mauleon and Vannetelbosch (2019) to study the R &D networks that will emerge in the long run when firms are neither myopic nor fully farsighted but have some limited degree of farsightedness. We find that a singleton set consisting of a pairwise stable network is a horizon-K farsighted set for any degree of farsightedness $$K\ge 2$$ K ≥ 2 . That is, each R &D network consisting of two components of nearly equal size satisfies both horizon-K deterrence of external deviations and horizon-K external stability for $$K\ge 2$$ K ≥ 2 . On the contrary, each R &D network consisting of two components with the largest one comprising three-quarters of firms, predicted when all firms are fully farsighted, violates horizon-K deterrence of external deviations. Thus, when firms are homogeneous in their degree of farsightedness, pairwise stable R &D networks consisting of two components of nearly equal size are robust to limited farsightedness.

Keywords: Limited farsightedness; Stability; $$ \hbox {R} \& \hbox {D}$$ R & D Networks (search for similar items in EconPapers)
JEL-codes: C70 L13 L20 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Limited Farsightedness in R&D Network Formation (2022)
Working Paper: Limited Farsightedness in R&D Network Formation (2021)
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DOI: 10.1007/s13235-022-00466-8

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