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IR&D Project Data and Theories of R&D Investment

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  • Frank R. Lichtenberg

Abstract

This paper analyzes data on a large sample of research and development (R&D) projects documented in the Defense Department's Independent R&O Data Bank, both to provide some stylized facts about R&O investment at the project level and to test the implications of a control-theoretical model developed by Grossman and Shapiro. We calculate moments of the marginal distributions and elasticities of cost with respect to time, by type of project (e.g. basic research, development), and discriminate between alternative hypothesis concerning the shape of the hazard function of R&D investment. Consistent with the major implication of the Grossman-Shapiro model, the rate of investment in a project tends to increase as the project approaches completion.

Suggested Citation

  • Frank R. Lichtenberg, 1988. "IR&D Project Data and Theories of R&D Investment," NBER Working Papers 2720, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2720
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    1. Roberts, Kevin & Weitzman, Martin L, 1981. "Funding Criteria for Research, Development, and Exploration Projects," Econometrica, Econometric Society, vol. 49(5), pages 1261-1288, September.
    2. Gene M. Grossman & Carl Shapiro, 1986. "Optimal Dynamic R&D Programs," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 581-593, Winter.
    3. Lichtenberg, Frank R, 1988. "The Private R&D Investment Response to Federal Design and Technical Competitions," American Economic Review, American Economic Association, vol. 78(3), pages 550-559, June.
    4. Robert E. Lucas, Jr., 1971. "Optimal Management of a Research and Development Project," Management Science, INFORMS, vol. 17(11), pages 679-697, July.
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