Too Much of a Good Thing? The Economics of Investment in R&D

@article{Jones1995TooMO,
  title={Too Much of a Good Thing? The Economics of Investment in R&D},
  author={C. Jones and J. Williams},
  journal={Journal of Economic Growth},
  year={1995},
  volume={5},
  pages={65-85}
}
Research and development is a key determinant of long-run productivity and welfare. A central issue is whether a decentralized economy undertakes too little or too much R&D. We develop an endogenous growth model that incorporates parametrically four important distortions to R&D: the surplus appropriability problem, knowledge spillovers, creative destruction, and duplication externalities. Calibrating the model, we find that the decentralized economy typically underinvests in R&D relative to… Expand
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