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On R&D and the undersupply of emerging versus mature technologies

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Abstract

An important policy question is whether research and development (R&D) in new, emerging technologies should be more subsidized than R&D in other more mature technologies. In this paper I analyze if innovation externalities caused by knowledge spillovers from private firms may warrant a differentiated R&D policy. I find that R&D in emerging and mature technologies should not be subsidized equally. The reason is that R&D in the two technologies is not equally undersupplied in the market due to differences in their knowledge stocks. R&D in the mature technology should be subsidized more when the sum of the output elasticities with respect to labor and knowledge in R&D production is high, while R&D in the emerging technology should be subsidized more when the elasticities are low.

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  • Tom-Reiel Heggedal, 2008. "On R&D and the undersupply of emerging versus mature technologies," Discussion Papers 571, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:571
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    Keywords

    Endogenous growth; Innovation policy; Technological spillovers; Sector-specific R&D.;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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