Low Returns in R&D Due to the Lack of Entrepreneurial Skills

Michelacci, Claudio

doi:10.2139/ssrn.296920

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Low Returns in R&D Due to the Lack of Entrepreneurial Skills

CEMFI Working Paper No. 0201

31 Pages Posted: 16 Jan 2002

See all articles by Claudio Michelacci

Claudio Michelacci

Centre for Monetary and Financial Studies (CEMFI); Centre for Economic Policy Research (CEPR)

There are 2 versions of this paper

Date Written: January 2002

Abstract

This paper proposes a model of endogenous growth where innovating requires both researchers, who produce inventions, and entrepreneurs who implement them. As research and entrepreneurship compete in the allocation of aggregate resources, the relation between growth and research effort is hump-shaped. When entrepreneurs appropriate too little rents from innovation, too few resources are allocated to entrepreneurship and returns to R&D are low because of this lack of entrepreneurial skills. When so, innovation should be promoted by encouraging entrepreneurship rather than research.

Keywords: R&D, Entrepreneurship, Search with endogenous growth

JEL Classification: O32, O40, J24

Suggested Citation: Suggested Citation

Michelacci, Claudio, Low Returns in R&D Due to the Lack of Entrepreneurial Skills (January 2002). CEMFI Working Paper No. 0201, Available at SSRN: https://ssrn.com/abstract=296920 or http://dx.doi.org/10.2139/ssrn.296920