Resource Misallocation in the Presence of R&D Spillovers

Kun Li, Helmuts Azacis and Kul Luintel ()
Additional contact information
Kun Li: Cardiff Business School

No E2023/24, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: We study resource misallocation by explicitly modelling R&D input and knowledge spillovers. The effects of R&D and spillovers on firm-level productivity are extensively studied in applied work, but not in the context of resource misallocation. We establish that, in the presence of spillovers, efficient resource allocation requires that more productive firms face higher R&D input prices. Analysing UK firm-level data, we find that the output gains from correcting misallocation are greatly overestimated when spillovers are ignored. Output losses due to capital distortions dominate those from labour and R&D inputs. Adopting a wrong R&D policy could lead to significant output losses.

Keywords: resource misallocation; productivity; R&D spillover; the UK manufacturing firms (search for similar items in EconPapers)
JEL-codes: D24 D61 O30 O47 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2023-09
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eff, nep-eur, nep-ino, nep-knm, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://carbsecon.com/wp/E2023_24.pdf (application/pdf)

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:cdf:wpaper:2023/24

Access Statistics for this paper

More papers in Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section Contact information at EDIRC.
Bibliographic data for series maintained by Yongdeng Xu ().