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|Title: ||Industry Size and the Distribution of R&D Investment|
|Authors: ||Asker, John|
Research and Development
|Issue Date: ||8-Feb-2008 |
|Series/Report no.: ||EC-08-05|
|Abstract: ||We analyze the link between industry size and R&D spending
distribution. We consider a monopolistically competitive market in which
firms can invest in cost-cutting R&D by paying a fixed cost first.
For an intermediate level of fixed cost, there is a unique equilibrium
in which the market segments into investing and non-investing firms.
Using this equilibrium, we study how the distribution and level of
R&D expenditure changes as industry size increases. In particular,
we show that, as the market size increases, R&D spending can become
more concentrated. Data motivating these results are drawn from the
Taiwanese and Korean semiconductor industries.|
|Appears in Collections:||Economics Working Papers|
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