R_and_D_collaboration_World_Economy-4.pdf (642.18 kB)

# Inter-firm R&D collaboration within and across national borders

journal contribution
posted on 03.06.2019, 13:22 by Huw EdwardsHuw Edwards, D. Gravino
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.

• Economics

## Published in

The World Economy

43

3

810 - 826

## Citation

EDWARDS, T.H., FERRETT, B.E. and GRAVINO, D., 2019. Inter-firm R&D collaboration within and across national borders. The World Economy, 43 (3), pp.810-826.

Wiley

## Version

AM (Accepted Manuscript)

## Rights holder

© John Wiley & Sons Ltd

## Publisher statement

This is the peer reviewed version of the following article: EDWARDS, T.H., FERRETT, B. and GRAVINO, D., 2019. Inter-firm R&D collaboration within and across national borders. The World Economy, 43 (3), pp.810-826, which has been published in final form at https://doi.org/10.1111/twec.12894. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

15/10/2019

2019-10-18

2019

## Notes

This paper was presented at XIX Conference on International Economics, Castellon, Spain, 28 Jun 2018 – Fri, 29 Jun 2018.

0378-5920

en