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Book/Printed Material Measuring the returns to r&d the depreciation problem

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Title

  • Measuring the returns to r&d the depreciation problem

Summary

  • "Measuring the private returns to R&D requires knowledge of its private depreciation or obsolescence rate, which is inherently variable and responds to competitive pressure. Nevertheless, most of the previous literature has used a constant depreciation rate to construct R&D capital stocks and measure the returns to R&D, a rate usually equal to 15 per cent. In this paper I review the implications of this assumption for the measurement of returns using two different methodologies: one based on the production function and another that uses firm market value to infer returns. Under the assumption that firms choose their R&D investment optimally, that is, marginal expected benefit equals marginal cost, I show that both estimates of returns can be inverted to derive an implied depreciation rate for R&D capital. I then test these ideas on a large unbalanced panel of U.S. manufacturing firms for the years 1974 to 2003. The two methods do not agree, in that the production function approach suggests depreciation rates near zero (or even appreciation) whereas the market value approach implies depreciation rates ranging from 20 to 40 per cent, depending on the period. The concluding section discusses the possible reasons for this finding"--National Bureau of Economic Research web site.

Names

  • Hall, Bronwyn H.
  • National Bureau of Economic Research

Created / Published

  • Cambridge, MA : National Bureau of Economic Research, c2007.

Notes

  • -  Title from PDF file as viewed on 10/12/2007.
  • -  Includes bibliographical references.
  • -  Also available in print.
  • -  Mode of access: World Wide Web.
  • -  System requirements: Adobe Acrobat Reader.

Call Number/Physical Location

  • HB1

Digital Id

Library of Congress Control Number

  • 2007616604

Access Advisory

  • Unrestricted online access

Online Format

  • image
  • pdf

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Citations are generated automatically from bibliographic data as a convenience, and may not be complete or accurate.

Chicago citation style:

Hall, Bronwyn H, and National Bureau Of Economic Research. Measuring the Returns to R&d the Depreciation Problem. Cambridge, MA: National Bureau of Economic Research, 2007. Pdf. https://aj.sunback.homes/item/2007616604/.

APA citation style:

Hall, B. H. & National Bureau Of Economic Research. (2007) Measuring the Returns to R&d the Depreciation Problem. Cambridge, MA: National Bureau of Economic Research. [Pdf] Retrieved from the Library of Congress, https://aj.sunback.homes/item/2007616604/.

MLA citation style:

Hall, Bronwyn H, and National Bureau Of Economic Research. Measuring the Returns to R&d the Depreciation Problem. Cambridge, MA: National Bureau of Economic Research, 2007. Pdf. Retrieved from the Library of Congress, <aj.sunback.homes/item/2007616604/>.