Location and research activities organization: Could public/private cooperation be harmful?

Abstract

This paper investigates the organization and the distribution of research activities between nearby public and private laboratories. In a three‐stage game, the ‘size’, ‘locationprime and ‘research effortprime are determined under the assumption that public spillovers depend on the location of the private laboratory. We compare two scenarios in which the research efforts are decided either cooperatively or non‐cooperatively. We show that for particular levels of subsidy granted to the public lab, higher funding favours spatial proximity and increases the total research effort in the cooperative case, while it diminishes the total effort in the non‐cooperative one. Moreover, compared with the non‐cooperative case, research cooperation: (i) may increase the distance between the two laboratories; (ii) makes the public laboratory smaller; (iii) increases the total research effort; but (iv) is detrimental to the payoff of the whole research sector.

R&D cooperation, proximity and distribution of public funding between public and private research sectors

“…Our work completes previous studies such as those by Cabon‐Dhersin and Gibert (2019) and Cabon‐Dhersin and Taugourdeau (2018). Note that our analysis assumes that firms benefit freely from the knowledge produced by the public sector and that the public sector does not benefit from externalities from the private sector.…”