Research and Development and Intraindustry Spillovers: an Empirical Application of Dynamic Duality

37 Pages Posted: 28 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: August 1986

Abstract

In this paper we estimate a model of production and investment based on the theory of dynamic duality and are particularly Interested in the effects of R&D spillovers and in calculating the social and private rates of return. We identify and estimate three effects associated with the intraindustry R&D spillover. First, costs decline as knowledge expands for the externality-receiving firms. Second, production structures are affected, as factor demands change in response to the spillover. Third, the rates of capital accumulation are affected by the R&D spillover. These cost-reducing, factor-biasing and capital adjustment effects of the spillover are estimated for four industries. The existence of R&D spillovers implies that the social and private rates of return to R&D capital differ. We estimate that the social return exceeds the private return in each industry. However, there is significant variation across industries in the differential between the social and private rates of return.

Suggested Citation

Bernstein, Jeffrey I. and Nadiri, M. Ishaq, Research and Development and Intraindustry Spillovers: an Empirical Application of Dynamic Duality (August 1986). NBER Working Paper No. w2002. Available at SSRN: https://ssrn.com/abstract=344801

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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National Bureau of Economic Research (NBER)

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United States

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