Endogenous R&D spillovers and locational choice

2006-05-30T11:44:51Z (GMT) by Claudio Piga Joanna Poyago-Theotoky
We present a three-stage game where two firms choose location, R&D and price, under the assumption that R&D spillovers depend on firms’ location. That is, the closer firms are to each other, the greater the benefit they receive from their rivals’ efforts in quality-enhancing R&D. We show that the distance between firms’ location increases with the degree of product differentiation. Further, we find that minimal quality differentiation always occurs. Finally, investment in R&D is positively associated with the degree of product differentiation.

Keyword(s)

License

CC BY-NC-ND 4.0