We　develop　a　model　of　R&D　networks　in　which　firms　can　choose　to　invest　in　R&D　or　to　establish　network　links　with　other　firms　to　absorb　R&D　spillovers　in　innovation　networks.　We　characterize　the　network　structure　of　firms＇　strategic　R&D　decisions　in　different　types　of　spatial　equilibrium.　We　further　extend　the　theoretical　framework　to　address　empirical　implications　for　the　industry　structure　under　cooperative　R&D,　firms＇　location　choice,　spatial　agglomeration,　and　social　capital　allocation.