Sinjeong Kim from Penn State will present "Evidence on Firm-to-Firm R&D Collaboration Intensity"

Abstract: Firms collaborate with other firms on R&D but allocate different amounts of resources to each collaboration. Because their R&D resources are limited, firms face a trade-off between many weak collaborations and fewer, stronger ones. Yet existing research on collaboration subsidies considers only whether firms collaborate, not how intensively they collaborate. I develop a model in which firms choose R&D collaborators, the intensity of each collaboration, and their R&D investment. I estimate the model using U.S. patent and accounting data. Counterfactual analysis shows that over a broad range of subsidy budgets, a targeted subsidy available only to collaborations that meet a minimum-scale requirement yields higher producer surplus than a uniform subsidy available to every collaboration. The uniform subsidy becomes preferable only when the subsidy budget exceeds $26 billion---more than three times observed private spending on collaborations.