Economic Consequences of Limited Technology Transferability

Xiangkang Yin and Ehud Zuscovitch

Australian Economic Papers, 1998, vol. 37, issue 1, 22-35

Abstract: Because technology is often context‐dependent and partly tacit, it is much less transferable than conventional ‘innovation and market structure’ models have long assumed. Technological know‐how is represented in this paper as a combination of formal knowledge and informal practice. The balance of these basic components is viewed as an optimisation of R&D investment structure and level within an oligopolistic framework. We analyse the outcomes of this optimisation in terms of R&D production efficiency and social welfare. With regard to R&D investment structure, we find that the equilibrium outcome is neither efficient nor socially optimal, and the stronger competition is, the larger the divergence from efficiency and social optimum. For R&D investment level, the results are less conclusive, but they imply that competition represents the best conditions for stimulating R&D investment

Date: 1998
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