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Spillovers Reconsidered: Analysing Economic Welfare under Complementarities in R&D

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Author Info
Georg von Graevenitz (INNO-tec, Munich School of Management)

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Abstract

We analyse economic welfare in R&D intensive industries under varying assumptions on the spillover process. The focus lies on spillover processes with complementary R&D investments such as those modelling absorptive capacity. There spillovers give rise to both negative and positive externalities. We show that the rationale for public policy intervention is strengthened where spillovers also have positive effects. This conclusion is based on the supermodularity of the spillover process and the investment game. We characterise a large class of spillover processes with similar implications for public policy. We show that results of much empirical work on absorptive capacity extend to this class of models.

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Paper provided by EconWPA in its series Industrial Organization with number 0503007.

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Length: 23 pages
Date of creation: 15 Mar 2005
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Handle: RePEc:wpa:wuwpio:0503007

Note: Type of Document - pdf; pages: 23
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Related research
Keywords: spillovers; complementarity; absorptive capacity; supermodularity; oligopolistic R&D;

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Find related papers by JEL classification:
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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