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A Structural Empirical Model of R&D Investment, Firm Heterogeneity, and Industry Evolution / Yanyou Chen, Daniel Xu.
- Format:
- Book
- Author/Creator:
- Chen, Yanyou.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29733.
- NBER working paper series no. w29733
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- This paper develops and estimates an industry equilibrium model of manufacturing plants in the Korean electric motor industry from 1991 to 1996. Plant-level decisions on R&D, physical capital investment, entry, and exit are integrated in a dynamic setting with knowledge spillovers. We use a simulated method of moments estimator and the novel approximation method of Weintraub, Benkard and Van Roy (2008) to estimate the R&D cost, magnitude of knowledge spillovers, adjustment costs of physical investment, and plant scrap value distribution. Knowledge spillovers are essential to explaining the firm-level productivity evolution and the equilibrium market configuration. A counterfactual experiment reveals that a 15% R&D subsidy maximizes industry output and is broadly consistent with a past policy initiative of the Korean government.
- Notes:
- Print version record
- February 2022.
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