Discussion Papers No. 571, December 2008 Statistics Norway, Research Department
Tom-Reiel Heggedal
On R&D and the undersupply of emerging versus mature
technologies
Abstract:
An important policy question is whether research and development (R&D) in new, emerging
technologies should be more subsidized than R&D in other more mature technologies. In this paper I analyze if innovation externalities caused by knowledge spillovers from private firms may warrant a differentiated R&D policy. I find that R&D in emerging and mature technologies should not be subsidized equally. The reason is that R&D in the two technologies is not equally undersupplied in the market due to differences in their knowledge stocks. R&D in the mature technology should be subsidized more when the sum of the output elasticities with respect to labor and knowledge in R&D production is high, while R&D in the emerging technology should be subsidized more when the elasticities are low.
Keywords: Endogenous growth; Innovation policy; Technological spillovers; Sector-specific R&D.
JEL classification: O32; O38.
Acknowledgement: I gratefully acknowledge the help of Mads Greaker, Cathrine Hagem and Atle Seierstad, and especially that of Michael Hoel who helped to improve the paper considerably.
Thanks to the Norwegian Research Council programs SAMSTEMT and RENERGI for financial support.
Address: Tom-Reiel Heggedal, Statistics Norway, Research Department. E-mail: tom@ssb.no
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