Does the Nature of Goods Affect Bilateral Exchange of Technology and Location Choice in Stable Networks?

Motivated by empirical evidence on firm networks in Italy, this paper explores the relationship between the nature of goods produced by firms operating in the same R&D network and their strategic location. We consider a two-firm spatial Cournot model deriving the conditions under which two firms create a cooperative link in order to share R&D cost-reducing investments. We show that the cooperative link is formed irrespective of the nature of goods produced by participating firms. However, the nature of goods produced affects the distance between firms belonging to the same networks; this distance tends to be greater when firms produce substitute goods. We also discuss the stability of the cooperative link.