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Identifying technology spillovers and product market rivalry

Bloom, Nick and Schankerman, Mark and Van Reenen, John (2013) Identifying technology spillovers and product market rivalry. Econometrica, 81 (4). pp. 1347-1393. ISSN 0012-9682

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Identification Number: 10.3982/ECTA9466


The impact of R&D on growth through spillovers has been a major topic of economic research over the last thirty years. A central problem in the literature is that firm performance is affected by two countervailing "spillovers" : a positive effect from technology (knowledge) spillovers and a negative business stealing effects from product market rivals. We develop a general framework incorporating these two types of spillovers and implement this model using measures of a firm's position in technology space and productmarket space. Using panel data on U.S. firms, we show that technology spillovers quantitatively dominate, so that the gross social returns to R&D are at least twice as high as the private returns. We identify the causal effect of R&D spillovers by using changes in federal and state tax incentives for R&D. We also find that smaller firms generate lower social returns to R&D because they operate more in technological niches. Finally, we detail the desirable properties of an ideal spillover measure and how existing approaches, including our new Mahalanobis measure, compare to these criteria.

Item Type: Article
Official URL:
Additional Information: © 2013 The Econometric Society
Subjects: T Technology > T Technology (General)
H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Date Deposited: 21 Aug 2013 07:49
Last Modified: 31 Jul 2014 14:44
Funders: Economic and Social Research Council

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