Research_Online@UCD: Absorptive capacity, R&D spillovers, and public policy

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Research_Online@UCD >
College of Human Sciences >
School of Economics >
Economics Working Papers & Policy Papers, 1982 -- August 2011 >

Please use this identifier to cite or link to this item: http://hdl.handle.net/10197/1312

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Title:	Absorptive capacity, R&D spillovers, and public policy
Author:	Leahy, Dermot Neary, J. Peter
Date:	May-2004
Publisher:	University College Dublin. School of Economics
Series or research strand:	UCD Centre for Economic Research Working Paper Series WP04/18
Type of material:	Working Paper
Abstract:	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 own R&D and lowers the effective spillover coefficient. This weakens the case for encouraging research joint ventures, even if there is complete information sharing between its members. It also implies an additional strategic pay-off to policies that raise the level of extra-industry knowledge.
Web link to reference this item:	http://hdl.handle.net/10197/1312
Keywords:	Absorptive capacity of R&D; R&D spillovers; Competition policy; Industrial policy; Research joint ventures;
NEREUS JEL code:	O31; L13;
Subject Heading:	Absorptive capacity (Economics); Research and development projects; Industrial policy;
Other web versions:	Publisher's version
Status of Item:	Not peer reviewed
Availability:	Full text available
Appears in Collections:	Economists Online Collection & RePEc Economics Working Papers & Policy Papers, 1982 -- August 2011

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