MANAGING ADVANCED TECHNOLOGY SYSTEM DEPLOYMENT: AN OPTIMAL ALLOCATION BETWEEN R&D AND PROTOTYPE FUNDING

Geoffrey Rothwell

Economics of Innovation and New Technology, 2007, vol. 16, issue 6, 419-432

Abstract: The research and development manager allocates R&D funds to maximize the expected discounted net value of the R&D programme. Because public R&D managers do not have the same market discipline (or rewards) as private R&D managers, public R&D managers require a methodology for maximizing the expected net benefits. The US National Research Council of the National Academies in Prospective Evaluation of Applied Energy Research and Development at DOE (Phase One): A First Look Forward (2005) proposed a cost-benefit methodology to evaluate US Department of Energy's Research, Development, and Demonstration (RD&D) programmes. This paper specifies and extends this methodology, e.g., by adding cost targets into each stage of the RD&D process. Expected benefits are modelled as a function of funding levels, stage durations, stage transition probabilities, and target costs. With this method, the paper determines an optimal allocation of pre-prototype R&D funding, given a total funding constraint for an advanced energy system.

Keywords: Decision analysis; Research and development; R&D management; RD&D; RDD&D; Technology development; Innovation; Energy policy; Advanced energy systems (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (4)

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DOI: 10.1080/10438590601153894

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