Abstract
The aim of this paper is to explore the characteristics of symmetric R&D networks that generate the highest overall welfare in a setting where spillovers between non-cooperating firms are ignored. The relationship between the network population and the outcomes is shown to be sensitive to the market structure. The first result pertains to the features of the successive efficient networks. In a differentiated product market, the consistency of the social and individual benefits is not affected by expanding the network. In contrast, the social benefit in a homogeneous product market limits the cooperation between firms. This in turn creates a gap between individual and social profits (an undesirable area). This gap between the two perspectives is maximized by increasing the network size. The second result concerns the expected improvement in the total welfare with respect to the network size. The results show that the benefit behind expanding the socially optimal structure is maximized when firms belong to a differentiated product market.