Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/88129 
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Papers No. 13-089
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
Using firm-level data from the German manufacturing sector, we estimate a dynamic, structural model of the firm's decision to invest in R&D and quantify the cost and longrun benefit of this investment. The model incorporates and quantifies linkages between the firm's R&D investment, product and process innovations, and future productivity and profits. The dynamic model provides a natural measure of the long-run payoff to R&D as the difference in expected firm value generated by the R&D investment. For the median productivity firm, investment in R&D raises firm value by 3.0 percent in a group of hightech industries but only 0.2 percent in low-tech industries. Simulations of the model show that cost subsidies for R&D can significantly affect R&D investment rates and productivity changes in the high-tech industries.
Subjects: 
R&D demand
Innovation
Productivity
Dynamic structural model
JEL: 
L60
O31
O32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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