Nonparametric quantile regression analysis of R&D-sales relationship for Korean firms

Joon-Woo Nahm ()
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Joon-Woo Nahm: Department of Economics, Sogang University, C.P.O. Box 1142, Seoul, Korea E-mail: Jnahm@ccs.sogang.ac.kr

Empirical Economics, 2001, vol. 26, issue 1, 259-270

Abstract: This paper applies the nonparametric quantile regression estimation procedure to the analysis of the innovation-firm size relationship using Korean manufacturing firms data. Due to the high asymmetric distribution of R&D expenditure, the mean regression does not capture properly the stylized facts of R&D behavior; hence it underestimates the sales elasticity. Comparing the parametric estimates and nonparametric estimates allows us to see that there exists a nonlinear relationship in innovative activity and sales. Dividing the data into three groups according to the sales volume, the elasticity in the medium-sized firms is the biggest for scientific firms. This result conforms that the findings of Scherer (1965) coincide with findings from Korean manufacturing firms data in the sense that R&D expenditure tends to increase faster than firm size with size up to a point and then more slowly among larger firms. For the non-scientific firms, it steadily increases showing increasing returns to scale in innovative activity in large firms.

Keywords: Quantile; regression; ·; Nonparametrics; ·; Average; median; derivative. (search for similar items in EconPapers)
Date: 2001-03-19
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Citations: View citations in EconPapers (9)

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