Estimating Firm Size Elasticities of Product and Process R&D

19 Pages Posted: 2 Mar 2010

See all articles by Joachim Inkmann

Joachim Inkmann

University of Melbourne - Department of Finance; Financial Research Network (FIRN)

Abstract

This paper provides an empirical test of the particular product life-cycle hypothesis which postulates that the firm size elasticity of process R&D exceeds the firm size elasticity of product R&D. Panel data on German manufacturing firms is used which is affected by attrition and sample selection. An inverse probability weighted generalized empirical likelihood (GEL) estimator is proposed, which corrects for the selectivity bias under the identifying assumption of conditionally independent selection and benefits from the superior small sample bias properties of GEL compared to generalized method of moments (GMM). The product life-cycle hypothesis is clearly rejected in all specifications.

Suggested Citation

Inkmann, Joachim, Estimating Firm Size Elasticities of Product and Process R&D. Economica, Vol. 77, Issue 306, pp. 384-402, April 2010. Available at SSRN: https://ssrn.com/abstract=1562145 or http://dx.doi.org/10.1111/j.1468-0335.2008.00768.x

Joachim Inkmann (Contact Author)

University of Melbourne - Department of Finance ( email )

Level 12, 198 Berkeley Street
University of Melbourne, Victoria 3010
Australia
0061 3 9035 8177 (Phone)

HOME PAGE: http://orcid.org/0000-0002-5526-7648

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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