Empirical Patterns of Firm Growth and R&D Investment: A Quality Ladder Model Interpretation

Tor Klette and Zvi Griliches

Economic Journal, 2000, vol. 110, issue 463, 363-87

Abstract: We present a partial equilibrium model of endogenous firm growth with R&D investment and stochastic innovation as the engines of growth, drawing on the quality ladder models in the macro growth literature, and the literature on patent races and the discrete choice models of product differentiation. The model fits a number of empirical patterns well, including: (i) a skewed size distribution of firms with persistent differences in firm sizes, (ii) firm growth independent of firm size, as stated in the so-called Gibrat's law, and (iii) R&D investment proportional to sales.

Date: 2000
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Related works:
Working Paper: Empirical patterns of firm growth and R&D investment: a quality ladder model interpretation (1999)
Working Paper: Empirical Patterns of Firm Growth and R&D Investment: a Quality Ladder Model Interpretation (1998)
Working Paper: Empirical Patterns of Firm Growth and R&D Investment: A QuUality LadderModel Interpretation (1998)
Working Paper: Empirical Patters of Firm Growth and R&D Investment: A Quality Ladder Model Interpretation (1997)
Working Paper: Empirical Patterns of Firm Growth and R&D Investment: A Quality Ladder Model Interpretation (1997)
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