Zikos, Vasileios,

Free trade agreements and international R&D networks / Vasileios Zikos. - iv, 34 pages : illustrations.


We study the endogenous formation of free trade agreements (FTAs) between countries and international R&D networks between .rms. The government of each country can initiate bilateral FTAs to abolish the import tariffs of other countries,
while firms decide whether (and with whom) to form R&D collaborations. We build a model of double-layer networks where the network of FTAs is formed in the first layer, and the R&D network in the second layer. Consistently with the stylized facts, we show that FTAs can promote international R&D collaboration between firms. Thus FTAs can be seen as a building block toward the expansion of R&D collaborations
between firms. In terms of efficiency, we find that private incentives to form FTAs align with societal ones. For R&D networks, however, private and social incentives are in conflict.

Free trade.

Networks. R&D collaboration.

382.71 / Z68f