The Value of Knowledge Spillovers in the US Semiconductor Industry

Yi Deng

No 516, Departmental Working Papers from Southern Methodist University, Department of Economics

Abstract: This paper aims at quantifying the economic value of knowledge spillovers by exploring information contained in patent citations. We estimate a market valuation equation for semiconductor firms during the 1980s and 1990s, and find an average value in the amount of $0.6 to 1.2 million "R&D-equivalent" dollars for knowledge spillovers embodied in one patent citation. For an average semiconductor firm, such an estimate implies that the total value of knowledge spillovers the firm received during the sample period could be as high as half of its actual total R&D expenditures in the same period. This provides a direct measure of the economic value of social returns or externalities of relevant technological innovations. We also find that the value of knowledge spillovers declines as the size of firm's patent portfolio increases, and that self citations are more valuable than external citations, indicating a significant amount of tacit knowledge or know-how spillovers that occur within the firm.

Keywords: Knowledge Spillovers; Patent Citation; R&D Expenditure; Tobin's Q (search for similar items in EconPapers)
JEL-codes: O33 O34 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2005-11, Revised 2006-11
New Economics Papers: this item is included in nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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