Topic: A Structural Network Formation Model and Its Application in R&D Networks

Lecturer: Prof.Xiaodong Liu, Department of Economics, University of Colorado Boulder

Time: 15:00-16:30 p.m. July 10th, 2023

Venue: B321 Zhixin Building, Central Campus

Abstract: 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.