Rates of Return on Physical and R&D Capital and Structure of the Production Process: Cross Section and Time Series Evidence

46 Pages Posted: 12 Jul 2010

See all articles by Jeffrey I. Bernstein

Jeffrey I. Bernstein

Carleton University - Department of Economics; National Bureau of Economic Research (NBER)

M. Ishaq Nadiri

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: April 1988

Abstract

R&D investment is an outcome of a corporate plan and is influenced by the exisintg technology, by prices, by product demand characteristics, and by the legacy of past capital stock decisions. In this paper we focus on the determinants and interaction of labor, physical capital and R&D. In particular, we investigate three major issues. The first relates to the nature of the factor substitution possibilities between the three inputs in response to changes in input pricees and estimate the own and cross once elasticities of the factors of production. The second problem pertains to the magnitude of which output expansion (or what may be considered the same thing, product demand growth) increases labor, physical, and R&D capital. Finally, we address the extent to which adjustment costs affect factor demands, and measure the magnitude of these costs for physical and R&D capital.

Suggested Citation

Bernstein, Jeffrey I. and Nadiri, M. Ishaq, Rates of Return on Physical and R&D Capital and Structure of the Production Process: Cross Section and Time Series Evidence (April 1988). NBER Working Paper No. w2570. Available at SSRN: https://ssrn.com/abstract=1638806

Jeffrey I. Bernstein

Carleton University - Department of Economics ( email )

1125 Colonel By Drive
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National Bureau of Economic Research (NBER)

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M. Ishaq Nadiri

New York University (NYU) - Department of Economics ( email )

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New York, NY 10011
United States
212-998-8968 (Phone)
212-995-4013 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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