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Innovation, Internationalization and the Environment

This group has investigated the theoretical explanations and empirical implications of some interrelated phenomena, namely, technological innovation - with a particular emphasis on R&D agreements -, location decision by firms in international oligopolies, environmental policies and their role in spurring innovation, and coalition formation in oligopolies. These topics combine two strands of research previously followed by some members of the group.

A first line of analysis concerned the study of R&D investment decisions, applying optimal control and dynamic game methods. The other line of enquiry dealt with different aspects of firms’ international strategy choices following a gametheoretic approach.

Currently the following research topics are under investigation by the group’s members:
Endogenous R&D Agreements over Time We introduced a new class of models of endogenous agreements between firms under imperfect competition in which also the timing of actions is made endogenous. The purpose was to bridge two usually separate streams of literature, the noncooperative formation of alliances (R&D agreements, mergers etc.) and the endogenous timing literature. This allowed to consider the formation of firms’ agreements over time. The models are currently also employed to study the endogenous formation of environmental agreements among different countries.
Innovation and Diffusion of Clean Technologies This stream of empirical research is motivated by the increased concern that the fragmentation of EU renewable energy research and innovation systems may hamper the ability to address climate challenges at socially acceptable costs. We build a knowledge diffusion econometric model to investigate the intensity and direction of knowledge spillovers in the strategic field of renewable energy technologies. In particular we examine the pattern and evolution of knowledge flows within the EU and between the EU and two frontier innovators: the US and Japan. We assess whether demand-pull environmental measures (starting from the 1997 Commission White Paper and following Directives) had an impact on the fragmentation of EU research and innovation space. Our results provide suggestive, but convincing evidence that the reduction in fragmentation emerged as a result of the EU support for renewable energy technologies.
Strategic formation of R&D agreements in presence of spillovers and informational asymmetries This research line aims to analyze firms’ incentives to invest in R&D under uncertainty and imperfect appropriability of the results of the research process. In particular, we investigate the extent to which firms’ R&D productivity and R&D spillovers affect the decision to sign agreements aimed to cooperation in R&D activities. For this purpose, we use a game-theoretical oligopoly model to identify the mechanisms underlying firms’ strategic decisions. The results obtained from the theoretical model contribute to explain some puzzling empirical evidence regarding the formation and the features of R&D cooperation agreements (such as RJVs). Moreover, we find a signaling role of cooperation agreements, able to foster efficient outcomes and welfare improvement. This confirms the importance of policies encouraging R&D collaboration among firms.
Migration, externalities and innovation This strand of research is motivated by the importance to analyze the effects and the implications of migration on firms’ innovative performance and strategic competitiveness, with a focus on Italian sub-regions. This research, although focused on a single country, can be informative also for other countries with a similar economic structure, which are likely to be affected by large immigration in the near future. The study is conducted using advanced econometric models supported by patent data and firms’ self-reported innovation measures (CIS data), and focuses on the role of substitution or complementarity between natives’ and migrants’s skill structure. A particular attention is devoted to the possible consequences of the inflow of cheap labor force in a country specialized in traditional, low value-added production. The estimation results do not show any significant negative effect on innovation, thus suggesting that low-skilled immigration does not represent a real shock in labor supply.


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