R&D Choice in Restructured Industries: In-House v/s Collaborative Research in the Us Electricity Industry

45 Pages Posted: 17 Jun 2004

See all articles by Linda R. Cohen

Linda R. Cohen

University of California, Irvine - Department of Economics; University of California, Irvine School of Law

Paroma Sanyal

Brandeis University - Department of Economics

Date Written: March 2004

Abstract

This paper studies the impact of market restructuring on the character of research and development (R&D) expenditures. Using a political economy approach, we consider the likely differences in internal and collaborative R&D activities under regulatory and market regimes, and test the predictions on R&D investments by a panel of investor owned electric utilities between 1989 and 1997. We find that spending on internal projects declines with the uncertainty associated with restructuring, but recuperates for companies in states that transition to relative competitive market regimes. Alternatively, external R&D expenditures (outsourced or consortium activities) are initially higher for firms subject to the uncertainty of the policy transition but subsequently decline in restructuring states. Our analysis yields insights into the incentives for firms to perform research internally or to outsource it, and suggests some new guidelines for effective public technology programs.

Keywords: Deregulation, electricity industry, research and development, technology policy

JEL Classification: L51, L94, O32

Suggested Citation

Cohen, Linda R. and Sanyal, Paroma, R&D Choice in Restructured Industries: In-House v/s Collaborative Research in the Us Electricity Industry (March 2004). Available at SSRN: https://ssrn.com/abstract=556645 or http://dx.doi.org/10.2139/ssrn.556645

Linda R. Cohen

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-824-5189 (Phone)
949-824-2182 (Fax)

University of California, Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

Paroma Sanyal (Contact Author)

Brandeis University - Department of Economics ( email )

Waltham, MA 02454
United States

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