Competing firms are usually better informed about their own cost parameters than about those of their rivals. Therefore, it is an important issue to study the incentives of firms to exchange private cost information. We resolve and further generalize an influential model of Raith (1996) and show...

Using newly available data at the firm level, this study provides convincing evidence of the importance of financial constraints in explaining the timing of innovations in the German services sector. Based on a dynamic model of firms' optimal R&D behavior under financial constraints, we estimate...

We develop a dynamic stochastic general-equilibrium model of science, education and innovation to explain the simultaneous emergence of innovation clusters and stochastic growth cycles. Firms devote human-capital resources to research activities in order to invent higher quality products. The...