Abstract
We test the theoretical prediction that inter-firm spillovers must necessarily be large for theprofit differential between cooperation and non-cooperation in R&D to be monotone increasingwith them. By using the French data from the 2002 Community Innovation Survey, we find thatspillovers have a significant positive impact on the likelihood that competitors cooperate horizontallyin R&D only if these spillovers exceed a threshold. Both the value and the significativityof estimates increase with the flow of information firms report receiving from competitors.