Empirical Modeling of R&D Demand in a Dynamic Framework
Empirical analysis of firm-level investment in research and development (R&D) and its effect on innovation patterns and productivity has advanced as a result of innovation surveys in many countries. The weak link in the analysis of these surveys is the empirical model of firm R&D choice. In this paper we summarize how a dynamic, structural model of firm investment can be used to estimate firm demand for R&D with the data collected in innovation surveys. The estimates provide a natural measure of the expected benefit to the firm of investing in R&D. They also allow the researcher to simulate how the firm's R&D investment will respond to factors that shift cost or demand such as a policy change designed to subsidize R&D expenditures or provide financial support to firms with less favorable access to capital markets. Copyright 2013, Oxford University Press.
Volume (Year): 35 (2013)
Issue (Month): 2 ()
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