Innovating Firms and Aggregate Innovation

Tor Klette and Samuel Kortum

No 8819, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a parsimonious model of innovating firms rich enough to confront firm-level evidence. It captures the dynamic behavior of individual heterogenous firms, describes the evolution of an industry with simultaneous entry and exit, and delivers a general equilibrium model of technological change. While unifying the theoretical analysis of firms, industries, and the aggregate economy, the model yields insights into empirical work on innovating firms. It accounts for the persistence over time of firms' R&D investment, the concentration of R&D among incumbent firms, and the link between R&D and patenting. Furthermore, it explains why R&D as a fraction of revenues is strongly related to firm productivity yet largely unrelated to firm size or growth.

JEL-codes: L11 O31 (search for similar items in EconPapers)
Date: 2002-02
New Economics Papers: this item is included in nep-ent and nep-ino
Note: PR
References: View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Published as Tor Jakob Klette & Samuel Kortum, 2004. "Innovating Firms and Aggregate Innovation," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 986-1018, October.

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Related works:
Journal Article: Innovating Firms and Aggregate Innovation (2004)
Working Paper: Innovating Firms and Aggregate Innovation (2002)
Working Paper: Innovating firms and aggregate innovation (2002)
Working Paper: Innovating Firms and Aggregate Innovation (2002)
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