Limited Farsightedness in R&D Network Formation

Ana Mauleon, José Sempere-Monerris and Vincent Vannetelbosch

No 2021006, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

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 ≥ 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 ≥ 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; R&D Networks (search for similar items in EconPapers)
JEL-codes: C70 L13 L20 (search for similar items in EconPapers)
Pages: 26
Date: 2021-06-04
New Economics Papers: this item is included in nep-gth, nep-net and nep-ore
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Journal Article: Limited Farsightedness in R &D Network Formation (2023)
Working Paper: Limited Farsightedness in R&D Network Formation (2022)
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