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Absorptive capacity, R&D spillovers, and public policy
Author(s)
Date Issued
2004-05
Date Available
2009-07-27T16:10:18Z
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.
Sponsorship
Economic and Social Research Council (ESRC)
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Series
UCD Centre for Economic Research Working Paper Series
WP04/18
Classification
O31
L13
Subject – LCSH
Absorptive capacity (Economics)
Research and development projects
Industrial policy
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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