Product Demand, Cost of Production, Spillovers, and the Social Rate of Return to R&D

47 Pages Posted: 27 Jun 2004

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: February 1991

Abstract

The purpose of this paper is to develop and estimate a model of production with endogenous technological change. Technological change arises from R&D capital accumulation decisions. These decisions respond to market and government incentives and generate R&D capital spillovers. A spillover network of senders and receivers is estimated. The network shows that each receiving industry is affected by a distinct set of R&D sources and each sending industry affects a unique set of receivers. For the receivers, spillovers generally expand product markets, lower product prices, increase production costs and input demands. For the sources, significant R&D spillovers cause the social rates of return to R&D capital to be substantially above the private returns.

Suggested Citation

Bernstein, Jeffrey I. and Nadiri, M. Ishaq, Product Demand, Cost of Production, Spillovers, and the Social Rate of Return to R&D (February 1991). NBER Working Paper No. w3625. Available at SSRN: https://ssrn.com/abstract=227438

Jeffrey I. Bernstein (Contact Author)

Carleton University - Department of Economics ( email )

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M. Ishaq Nadiri

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

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