Measuring the Private and Social Returns to R&D: Unintended Spillovers versus Technology Markets

Dr. Pere Arqué-Castellsy , University of Groningen

Estimates of the private and social rates of return to investments in R&D are of high interest to economists, managers and policymakers. An important problem in the literature is that the canonical model used to obtain such estimates only allows R&D to diffuse through spillovers.  This is a serious limitation in a world increasingly characterized by active intellectual property (IP) enforcement and monetization. We create a new dataset of interactions in the market for technology between publicly held firms in the U.S. which allows us to generalize the canonical model with both spillovers and market-mediated technology transfers. We obtain four main findings using changes in tax incentives for R&D to identify causal effects. First, R&D accessed through technology markets is an important input in the generation of revenue. Second, conventional spillover estimates are contaminated with technology transfers because the weights traditionally used to capture spillovers are strongly correlated with matching in the market for technology. Third, the private rate of return to R&D is larger in the generalized framework while the wedge between the social and private returns is smaller. Finally, back of the envelope estimates suggest that the gains from trade in the market for technology might be larger than $1 trillion per year, accounting for 10% of total revenue in Compustat.

About the speaker

I am an Assistant Professor in the Innovation Management and Strategy department at the University of Groningen. In the past I have worked as a Research Associate at the Northwestern University Pritzker School of Law (Center on Law, Business and Economics) and as a postdoctoral researcher at the Universitat Autònoma de Barcelona. I obtained an MSc in Economics at the London School of Economics and a Ph.D. in Economics at the Universitat de Barcelona.


I am an empirical researcher on the Economics of Innovation. My research studies the process of knowledge creation and diffusion, and its impact on firm performance. The main goal of my research is to generate new evidence and conceptual frameworks that help A) improve firm decision-making and B) inform innovation policy. The topics I study include the market for technology, intangible asset valuation, IP and innovation, venture capital and innovation, R&D policy, and university technology transfer. My research speaks to a broad audience including scholars, managers and policymakers.

Venue: 0.16/0.17

Date: 05 December 2019

Time: 12:00 - 13:00