2134/37865
Huw Edwards
Huw
Edwards
Ben Ferrett
Ben
Ferrett
D. Gravino
D.
Gravino
Inter-firm R&D collaboration within and across national borders
Loughborough University
2019
R&D collaboration
RJV
Spatial competition
Country size
Trade costs
Economics not elsewhere classified
2019-06-03 13:22:04
Journal contribution
https://repository.lboro.ac.uk/articles/journal_contribution/Inter-firm_R_D_collaboration_within_and_across_national_borders/9491300
We set up a model to investigate the strategic aspect of a firm’s
incentive to collaborate in cost-reducing R&D with either a local or a
foreign partner. We argue that collaboration with a foreign firm is preferred to collaboration with a local firm if the extra profits generated by
a foreign collaboration exceed the additional cost of coordinating collaboration across national borders. We show that foreign collaboration is
more likely the bigger the home-market-size of the foreign firm and, given
certain conditions, the higher the international trade cost. We also show
that whenever a foreign collaboration arises in equilibrium, it is efficient
(i.e. world-welfare-maximising); and that there are cases where: (i) a
foreign collaboration would be efficient but a local collaboration emerges
in equilibrium; and (ii) an efficient foreign collaboration emerges in equilibrium, but one of the countries would prefer a local collaboration. We
briefly consider the policy implications of these findings.