Endogenous R&D spillovers and locational choice

Claudio Piga, Joanna Poyago-Theotoky

Research output: Contribution to journalArticle

53 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)127-139
Number of pages13
JournalRegional Science and Urban Economics
Volume35
Issue number2
DOIs
Publication statusPublished - 1 Mar 2005
Externally publishedYes

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