Cost-Reducing and Demand-Creating R&D with Spillovers

Richard C. Levin and Peter C. Reiss

RAND Journal of Economics, 1988, vol. 19, issue 4, 538-556

Abstract: This article analyzes R&D policies when the returns to cost-reducing and demand-creating R&D are imperfectly appropriable and market structure is endogenous. We generalize previous characterizations of appropriability to permit the possibility that own and rival R&D are imperfect substitutes. We also describe how equilibrium expenditures on process and product R&D, as well as equilibrium market structure, depend on technological opportunities and spillovers. In contrast to previous work, diminished appropriability does not necessarily reduce R&D expenditures. For example, under some conditions, an increase in the extent of process (product) spillovers will lead to an increase in product (process) R&D. We estimate several variants of the model by using manufacturing line-of-business data and data from a survey of R&D executives.

Date: 1988
References: Add references at CitEc
Citations: View citations in EconPapers (174)

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819882 ... O%3B2-5&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rje:randje:v:19:y:1988:i:winter:p:538-556

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().