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The effect of entry on R&D networks

Emmanuel Petrakis () and Nikolas Tsakas ()

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: We investigate the effect of potential entry on the formation and stability of R&D networks considering farsighted firms. We show that the presence of a potential entrant often alters the incentives of incumbent firms to establish an R&D link. In particular, incumbent firms may choose to form an otherwise undesirable R&D collaboration in order to deter the entry of a new firm. Moreover, an incumbent firm may refrain from establishing an otherwise desirable R&D collaboration, expecting to form a more profitable R&D link with the entrant. Finally, potential entry may lead an inefficient incumbent to exit the market. We also perform a welfare analysisand show that market and societal incentives are often misaligned.

Keywords: R&D Networks; Entry; Farsighted stability (search for similar items in EconPapers)
JEL-codes: D85 L24 O33 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2016-09
New Economics Papers: this item is included in nep-com, nep-cse, nep-ent, nep-ind, nep-ino, nep-knm, nep-sog and nep-tid
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Journal Article: The effect of entry on R&D networks (2018) Downloads
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