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Comparison of excess social rates of return to product and process R&D

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  • Tony Buxton
  • Gerry Kennally

Abstract

This paper reports results for a well established production function that includes research and development (R&D). By assuming zero depreciation, it can be used to provide estimates of excess social rates of return to R&D. The estimates distinguish spending on product and process innovations for three US manufacturing industries. The results suggest that, while excess social rates of return are found to be negative for product R&D, they are positive for process in each of the industries. They therefore suggest some scope for public R&D subsidies or tax benefits to process R&D but not to product R&D.

Suggested Citation

  • Tony Buxton & Gerry Kennally, 2004. "Comparison of excess social rates of return to product and process R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(6), pages 509-521.
    • Handle: RePEc:taf:ecinnt:v:13:y:2004:i:6:p:509-521
    DOI: 10.1080/10438590310001627884
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