Good news for Michael König! His paper on “Endogenous Technology Spillovers in Dynamic R&D Networks” (co-authored by Chih-Sheng Hsieh and Xiaodong Liu) has been accepted for publication in the RAND Journal of Economics. The abstract is provided below.


We introduce a stochastic R&D network formation model where firms choose both R&D efforts and collaboration partners. Neighbors in the network benefit from each other’s R&D efforts through local technology spillovers, and there exists a global competition effect reflecting strategic substitutability in R&D efforts. We provide a complete equilibrium characterization of the network formation model and show that the model is consistent with empirically observed R&D networks. Based on the equilibrium characterization, we propose an estimation method that is computationally feasible even for large networks. With the estimated model we then conduct an analysis of R&D collaboration subsidies to demonstrate the policy relevance of this model. We find that a subsidy scheme targeting specific R&D collaborations in the network can be much more effective than a uniform subsidy, with a welfare gain up to five times larger than the cost of the subsidy.

Read a working version of the above paper.

Visit Michael’s research page