Research and Development and Intraindustry Spillovers: An Empirical Application of Dynamic Duality

Jeffrey Bernstein and M. Ishaq Nadiri

No 2002, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we estimate a model of production and investment based on the theory of dynamic duality and are particularly Interested in the effects of R&D spillovers and in calculating the social and private rates of return. We identify and estimate three effects associated with the intraindustry R&D spillover. First, costs decline as knowledge expands for the externality-receiving firms. Second, production structures are affected, as factor demands change in response to the spillover. Third, the rates of capital accumulation are affected by the R&D spillover. These cost-reducing, factor-biasing and capital adjustment effects of the spillover are estimated for four industries. The existence of R&D spillovers implies that the social and private rates of return to R&D capital differ. We estimate that the social return exceeds the private return in each industry. However, there is significant variation across industries in the differential between the social and private rates of return.

Date: 1986-08
Note: PR
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Published as Review of Economic Studies, Vol. 56, pp. 249-269, (April 1989).

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Related works:
Journal Article: Research and Development and Intra-industry Spillovers: An Empirical Application of Dynamic Duality (1989)
Working Paper: Research and Development and Intraindustry Spillovers: An Empirical Application of Dynamic Duality (1988)
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