Cookies?
Library Header Image
LSE Research Online LSE Library Services

Knowledge flow and sequential innovation: implications for technology diffusion, r&d and market value

Belenzon, Sharon (2006) Knowledge flow and sequential innovation: implications for technology diffusion, r&d and market value. CEPDP, 721. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753019477

[img]
Preview
PDF
Download (610Kb) | Preview

Abstract

It is shown that spillovers can enhance private returns to innovation if they feed back into the dynamic research of the original inventor (Internalized spillovers), but will always reduce private returns, if the original inventor does not benefit from the advancements other inventors build into the “spilled” knowledge (Externalized spillovers). I empirically identify unique patterns of knowledge flows (based on patent citations), which provide information about whether “spilled” knowledge is reabsorbed by its inventor. A simple model of sequential innovation with dynamic spillovers is developed, which predicts that market value and R&D expenditures should rise with Internalized spillovers and fall with Externalized spillovers. These predications are confirmed using panel data on U.S. firms between 1981 and 2001. To the extent that firms internalize some of the spillovers they create, the classical underinvestment problem in R&D will be mitigated and the central role of spillovers in promoting economic growth will be enhanced.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2006 Sharon Belenzon
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System: O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O31 - Innovation and Invention: Processes and Incentives
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O32 - Management of Technological Innovation and R&D
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 721
Date Deposited: 23 Jul 2008 11:15
URL: http://eprints.lse.ac.uk/19864/

Actions (login required)

Record administration - authorised staff only Record administration - authorised staff only