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    Absorptive capacity, R&D spillovers, and public policy

    Leahy, Dermot (2007) Absorptive capacity, R&D spillovers, and public policy. International Journal of Industrial Organization, 25 (5). pp. 1089-1108. ISSN 0167-7187

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    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 ownR&Dand lowers the effective spillover coefficient. Thisweakens the case for encouraging research joint ventures, even if there is complete information sharing between members. It also implies an additional strategic pay-off to policies that raise the level of extra-industry knowledge.

    Item Type: Article
    Keywords: Absorptive capacity of R&D; Competition policy; Industrial policy; R&D spillovers; Research joint ventures;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8461
    Depositing User: Dermot Leahy
    Date Deposited: 18 Jul 2017 08:52
    Journal or Publication Title: International Journal of Industrial Organization
    Publisher: Elsevier
    Refereed: Yes
    Use Licence: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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