Absorptive capacity, R&D spillovers, and public policy

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Title: Absorptive capacity, R&D spillovers, and public policy
Authors: Leahy, Dermot
Neary, J. Peter
Permanent link: http://hdl.handle.net/10197/1312
Date: May-2004
Abstract: Empirical evidence strongly suggests that R&D increases a firm’s "absorptive capacity" (its ability to absorb spillovers from other firms) as well as contributing directly to profitability. We explore the theoretical implications of this. We specify a general model of the absorptive capacity process and show that costly absorption both raises the effectiveness of own R&D and lowers the effective spillover coefficient. This weakens the case for encouraging research joint ventures, even if there is complete information sharing between its members. It also implies an additional strategic pay-off to policies that raise the level of extra-industry knowledge.
Funding Details: Economic and Social Research Council (ESRC)
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Keywords: Absorptive capacity of R&DR&D spilloversCompetition policyIndustrial policyResearch joint ventures
Subject LCSH: Absorptive capacity (Economics)
Research and development projects
Industrial policy
Other versions: http://www.ucd.ie/economics/research/papers/2004/WP04.18.pdf
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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