Cobb-Douglas R&D production function, appropriability and opportunity: effects on R&D, technological progress and knowledge sharing

• Type: Article in International Scientific Journal
• Date: 2023

Authors

da Silva, MAPM (Author) FEP

Journal

Title: ECONOMICS OF INNOVATION AND NEW TECHNOLOGY

Vol. 32

Pages: 1069-1086

ISSN: 1043-8599

Indexing

ISI Web of Knowledge - 5 Citations

Scopus - 5 Citations

Other information

Authenticus ID: P-00W-KG1

DOI: 10.1080/10438599.2022.2072307

Abstract (EN): We consider a Cobb-Douglas production function with two firm-specific R&D resource inputs and specify the conditions under which higher knowledge spillovers cause higher technological progress in the industry. We then consider the exponential R&D production function and establish sufficient conditions for per-firm own R&D expenditures to be an increasing function of knowledge spillovers and technological opportunities. Knowledge spillovers and technological possibilities encourage R&D spending if firms' decisions on R&D investments are strategic complements. We consider two identical firms that, prior to competition in the product market, first decide whether to reveal their R&D efforts to the other firm and second conduct cost-reducing or demand-enhancing R&D and examine the conditions under which full revelation of R&D efforts to rivals yields higher profits. Trigger strategies which require non-cooperative firms to share their R&D inputs will ensure the efficient sharing of R&D efforts. This model has new policy implications about the effects of knowledge spillovers and complementarity in R&D on the incentives to innovate and promote welfare. We present an intellectual property policy that challenges the traditional model of intellectual property as exclusive ownership rights.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 18