A simple model of R&D: An extension of the Dorfman-Steiner theorem
Titel:
A simple model of R&D: An extension of the Dorfman-Steiner theorem
Auteur:
Lee, Chang-Yang
Verschenen in:
Applied economics letters
Paginering:
Jaargang 9 (2002) nr. 7 pagina's 449-452
Jaar:
2002-06-10
Inhoud:
This paper extends the seminal Dorfman-Steiner ( American Economic Review , 44 , 826-36, 1954) theorem by putting underlying structures on the determination of market share and on the production of quality or technology. The model developed in this paper yields a demand-pull, technology-push theory of R&D, where the profit-maximizing R&D intensity (i.e., the ratio of R&D expenditure to sales) is determined jointly by consumer characteristics, represented by the elasticities of consumer value with respect to price and quality, and firm-specific technological competence or simply R&D productivity, measured as the R&D elasticity of quality or technological output.