Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/149012 
Year of Publication: 
2016
Series/Report no.: 
Center for Mathematical Economics Working Papers No. 555
Publisher: 
Bielefeld University, Center for Mathematical Economics (IMW), Bielefeld
Abstract: 
We study investments in R&D and the formation of R&D clusters of firms which are competitors in the market. In a three stage game, firms first decide on long-term R&D investment, then form research clusters according to the unanimity game introduced in Bloch(1995), and finally compete in quantities. For some range of investment costs, equilibria with no-investment co-exist with equilibria where a large fraction of firms invest in R&D. Because of the effects of R&D investment on cluster membership, firms tend to over-invest compared to a scenario where research clusters are ex-ante fixed and also compared to the welfare optimum.
Subjects: 
R&D
cluster formation
oligopoly
JEL: 
C71
C72
L13
O30
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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