The relationship between R&D spillovers and regional innovation: Licensing patents through royalties and the Stackelberg duopoly with subgame perfect Nash equilibrium

TL;DR

This paper investigates how R&D spillovers influence regional innovation in Greece from 2002 to 2010, using game theory and regional data to identify key drivers and synergies.

Contribution

It introduces a game theory model of patent licensing via royalties within a Stackelberg duopoly to analyze R&D spillovers and regional innovation.

Findings

Highly-qualified employment boosts regional innovation.

Synergies between manufacturing R&D personnel and public sector R&D are beneficial.

R&D expenditure and employment in manufacturing are positively associated with innovation.

Abstract

The present paper examines the effect of R&D spillovers on regional innovation in Greece over the 2002-2010 period. The approach taken goes beyond a regional knowledge production function and draws possible explanations from a more extensive pool of R&D related and regional structural variables. Having employed game theory techniques in order to describe the licensing of the patents through royalties and derived the subgame perfect Nash equilibrium under a Stackelberg duopoly, the results obtained accord with findings of previous studies when it comes R&D expenditure related variables and further suggest that the role of highly-qualified employment is instrumental in promoting regional innovation. The results also suggest the benefits of synergies between R&D personnel in manufacturing and other measures of highly-qualified employment as well as R&D expenditure of the public sector and employment in manufacturing business R&D for regional innovation.