The Rate of Obsolescence Of Knowledge, Research Gestation Lags, and the Private Rate of Return to Research Resources

Abstract

The recent interest of economists in knowledge-producing activities has two main strands. The first is an attempt to explain the growth in the measured productivity of traditional factors of production by incorporating research resources in production function and social accounting frameworks (for a review see Griliches 1973, 1980). The second derives from two fundamental characteristics of knowledge as an economic commodity, its low or zero cost of reproduction and the difficulty of excluding others from its use. These features give knowledge the character of a public good and suggest that the structure of market incentives may not elicit the socially desirable level (or pattern) of research and development expenditures. In particular, it has been argued that market incentives may create either underinvestment or overinvestment in knowledgeproducing activities (see Arrow 1962; Dasgupta and Stiglitz 1980). To investigate this possibility, economists have applied the techniques of productivity analysis and estimated the private (and social) rate of return to research from production functions incorporating research resources as a factor of production. The estimates of the private return for the late 1950s and early 1960s fall in the range of 30-45 percent. 1 Despite these

Wrongful Discharge Laws and Innovation

“…This proxy is motivated by the recognition that a simple count of patents does not distinguish breakthrough innovations from less significant or incremental technological discoveries. 11 Intuitively, if firms are willing to further invest in a project that 11 Pakes and Shankerman (1984) show that the distribution of the importance of patents is extremely builds upon a prior patent, the cited patent has been influential and economically significant.…”

Exploring the Tail of Patented Invention Value Distributions

“…Pakes and Schankerman (1984), Schankerman and Pakes (1986), Pakes (1986), Lanjouw (1992), and Lanjouw, Pakes and Putnam (1996). 3 See e.g.…”

Patent litigation as a leading market indicator

“…We plot the data from Table 3 (6) where L m =70, f=333.11908, g=1.66852027, with R 2 =0.94. We combine the PLI curve and the market growth curve of the cellular phone market in Figure 5.…”

“…Although research shows that patent citations is a useful proxy to indicate that knowledge is being diffused, we seek a more direct indicator to link a specific class of patent activities to economic growth. In addition, patents are not always renewed [6][7][8][9]. Our line of thinking is motivated by our experience in high technology industry which tells us that patent citations are activities largely related to research and development, analysis of competitor capabilities, and acquisition of competitive knowledge.…”

“…Patent renewal information has been a line of research to determine its relationship to economic growth [6][7][8][9]. However, the visibility is thin regarding the nature of the mechanisms of knowledge flow.…”