Public R&D Investment and Cost Behaviour in Italian Agriculture: 1960-1995

Roberto Esposti and Pierpaolo Pierani

No 24974, 2002 International Congress, August 28-31, 2002, Zaragoza, Spain from European Association of Agricultural Economists

Abstract: The public R&D capital stock is introduced as a quasi-fixed input in a variable cost function. The relative shadow price allows the correct measurement of the equilibrium levels of quasi-fixed inputs thus explicitly assessing the hypothesis of public R&D under (over) investment. By introducing an appropriate R&D price in the long-run equilibrium, the model can also provide empirical evidence on the rationale driving public R&D investment and on the hypothesis that free-riding on public R&D can explain overinvestment. Moreover, the model allows a formal testing of the induced innovation hypothesis and a more accurate calculation of both internal rate of return to R&D and residual exogenous productivity growth. The empirical implications of the model are appraised in the case of Italian agriculture for the period 1960-1995.

Keywords: Public; Economics (search for similar items in EconPapers)
Pages: 19
Date: 2002
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae02:24974

DOI: 10.22004/ag.econ.24974

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