Identifying technology spillovers and product market rivalry

Nicholas Bloom, Mark Schankerman and John van Reenen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The impact of R&D on growth through spillovers has been a major topic of economic research over the last thirty years. A central problem in the literature is that firm performance is affected by two countervailing "spillovers" : a positive effect from technology (knowledge) spillovers and a negative business stealing effects from product market rivals. We develop a general framework incorporating these two types of spillovers and implement this model using measures of a firm's position in technology space and productmarket space. Using panel data on U.S. firms, we show that technology spillovers quantitatively dominate, so that the gross social returns to R&D are at least twice as high as the private returns. We identify the causal effect of R&D spillovers by using changes in federal and state tax incentives for R&D. We also find that smaller firms generate lower social returns to R&D because they operate more in technological niches. Finally, we detail the desirable properties of an ideal spillover measure and how existing approaches, including our new Mahalanobis measure, compare to these criteria.

Keywords: market value; patents; productivity; R&D; spillovers (search for similar items in EconPapers)
JEL-codes: F23 L1 O31 O32 O33 (search for similar items in EconPapers)
Date: 2013-07-17
New Economics Papers: this item is included in nep-com, nep-cse, nep-eff, nep-sbm, nep-tid and nep-ure
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Citations: View citations in EconPapers (659)

Published in Econometrica, 17, July, 2013, 81(4), pp. 1347-1393. ISSN: 0012-9682

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http://eprints.lse.ac.uk/46852/ Open access version. (application/pdf)

Related works:
Journal Article: Identifying Technology Spillovers and Product Market Rivalry (2013)
Working Paper: Identifying technology spillovers and product market rivalry (2007)
Working Paper: Identifying Technology Spillovers and Product Market Rivalry (2007)
Journal Article: Identifying technology spillovers and product market rivalry (2005)
Working Paper: Identifying Technology Spillovers and Product Market Rivalry (2005)
Working Paper: Identifying technology spillovers and product market rivalry (2005)
Working Paper: Identifying Technology Spillovers and Product Market Rivalry (2005)
Working Paper: Identifying technology spillovers and product market rivalry (2005)
Working Paper: Identifying technology spillovers and product market rivalry (2005)
Working Paper: Identifying technology spillovers and product market rivalry (2005)
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