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Identifying technology spillovers and product market rivalry

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  • Nick Bloom
  • Mark Schankerman
  • John Van Reenen

Abstract

Support for many R&D and technology policies relies on empirical evidence that R&D "spills over" between firms. But there are two countervailing R&D spillovers: positive effects from technology spillovers and negative effects from business stealing by product market rivals. We develop a general framework showing that technology and product market spillovers have testable implications for a range of performance indicators, and exploits these using distinct measures of a firm's position in technology space and product market space. We show using panel data on U.S. firms between 1981 and 2001 that both technology and product market spillovers operate, but that net social returns are several times larger than private returns. The spillover effects are also revealed when we analyze three hightech sectors in detail - pharmaceuticals, computer hardware andtelecommunication equipment. Using the model we evaluate three R&Dsubsidy policies and show that the typical focus of support for small and medium firms may be misplaced.

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Bibliographic Info

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Economics of Industry Papers with number 40.

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Date of creation: Jan 2005
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Handle: RePEc:cep:stieip:40

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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

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Keywords: Spillovers; R&D; market value; patents.;

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  1. Charles I. Jones & John C. Williams, 1998. "Measuring The Social Return To R&D," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1119-1135, November.
  2. Klette, Tor Jakob & Griliches, Zvi, 1996. "The Inconsistency of Common Scale Estimators When Output Prices Are Unobserved and Endogenous," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 11(4), pages 343-61, July-Aug..
  3. Keller, Wolfgang, 2002. "International Technology Diffusion," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3133, C.E.P.R. Discussion Papers.
  4. Lee, Tom & Wilde, Louis L, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 94(2), pages 429-36, March.
  5. Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers, Tel Aviv 14-92, Tel Aviv.
  6. Acemoglu, Daron & Aghion, Philippe & Zilibotti, Fabrizio, 2002. "Distance to Frontier, Selection, and Economic Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3467, C.E.P.R. Discussion Papers.
  7. Cockburn, Iain. & Henderson, Iain., 1994. "Racing to invest? : the dynamics of competition in ethical drug discovery," Working papers, Massachusetts Institute of Technology (MIT), Sloan School of Management 3710-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  8. Glenn C. Loury, 1976. "Market Structure and Innovation," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 256, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Jasjit Singh, 2005. "Collaborative Networks as Determinants of Knowledge Diffusion Patterns," Management Science, INFORMS, INFORMS, vol. 51(5), pages 756-770, May.
  10. Joris Pinkse & Margaret E. Slade & Craig Brett, 2002. "Spatial Price Competition: A Semiparametric Approach," Econometrica, Econometric Society, Econometric Society, vol. 70(3), pages 1111-1153, May.
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  1. “Identifying Technology Spillovers and Product Market Rivalry,” N. Bloom, M. Schankerman & J. Van Reenen (2013)
    by afinetheorem in A Fine Theorem on 2013-11-18 08:28:05
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