Knowledge Accumulation in an R&D Network

In this chapter we propose an oligopoly model where firms invest in cost reducing R&D for producing homogeneous goods that are sold in a market. In particular, weassume that R&D efforts build up a ”stock of knowledge”, which, in turn, reducesmarginal costs of production. Moreover, though all firms are competitors in the marketplace, they can decide to collaborate through cooperation agreements in a networkfor sharing their R&D results.