Limited Farsightedness in R&D Network Formation

Ana Mauleon, José Sempere-Monerris and Vincent Vannetelbosch
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Vincent Vannetelbosch: Université catholique de Louvain, LIDAM/CORE, Belgium

No 3214, LIDAM Reprints 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: 17
Date: 2022-08-01
Note: In: Dynamic Games and Applications, 2022
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Journal Article: Limited Farsightedness in R &D Network Formation (2023)
Working Paper: Limited Farsightedness in R&D Network Formation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvrp:3214

DOI: 10.1007/s13235-022-00466-8

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