Measuring the Private and Social Returns to R&D: Unintended Spillovers versus Technology Markets

Pere Arqué-Castells and Daniel Spulber

Journal of Political Economy, 2022, vol. 130, issue 7, 1860 - 1918

Abstract: The canonical approach to measuring private and social returns to R&D assumes diffusion through spillovers. We develop a general framework that allows R&D to diffuse through both spillovers and voluntary technology transfers. To operationalize the framework, we create a data set of interactions in the market for technology between publicly held US firms. We use changes in tax incentives for R&D to identify causal effects. Taking market channels into account decreases the observed difference between social and private returns to R&D as compared with the canonical approach. The analysis suggests significant gains from trade in markets for technology.

Date: 2022
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