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The Value of Knowledge Spillovers in the US Semiconductor Industry

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  • Deng, Yi

    () (Department of Economics, Southern Methodist University)

Abstract

This paper aims at quantifying the economic value of knowledge spillovers by exploring information contained in patent citations. We estimate a market valuation equation for semiconductor firms during the 1980s and 1990s, and find an average value in the amount of $0.6 to 1.2 million "R&D-equivalent" dollars for knowledge spillovers embodied in one patent citation. For an average semiconductor firm, such an estimate implies that the total value of knowledge spillovers the firm received during the sample period could be as high as half of its actual total R&D expenditures in the same period. This provides a direct measure of the economic value of social returns or externalities of relevant technological innovations. We also find that the value of knowledge spillovers declines as the size of firm's patent portfolio increases, and that self citations are more valuable than external citations, indicating a significant amount of tacit knowledge or know-how spillovers that occur within the firm.

Suggested Citation

  • Deng, Yi, 2005. "The Value of Knowledge Spillovers in the US Semiconductor Industry," Departmental Working Papers 0516, Southern Methodist University, Department of Economics, revised Nov 2006.
  • Handle: RePEc:smu:ecowpa:0516
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    File URL: ftp://ftp1.economics.smu.edu/WorkingPapers/2005/Deng/scpatcit_nov06.pdf
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    References listed on IDEAS

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    Keywords

    Knowledge Spillovers; Patent Citation; R&D Expenditure; Tobin's Q;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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