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Title:R&D and price elasticity of demand PDF Logo
Authors:Lucke, Dorothea
Schröder, Philipp J. H.
Schumacher, Dieter
Issue Date:2004
Series/Report no.:DIW-Diskussionspapiere 430
Abstract:This note explores the relationship between the price elasticity of demand and the R&D intensity of the product. We introduce the concept of R&D intensity into a standard Dixit-Stiglitz/Krugman-type setting. R&D activity is treated as a fixed cost of production. Within this framework, sectors with a higher R&D intensity show a lower price elasticity of demand. This proposition is confirmed by an empirical investigation of export demand for manufactured goods from major industrialised countries. Consequently, real exchange rate changes have an impact on the commodity structure of exports.
Subjects:R&D intensity
price elasticity
exports
JEL:D40
F14
F12
Document Type:Working Paper
Appears in Collections:DIW-Diskussionspapiere
Publikationen von Forscherinnen und Forschern des DIW

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