Speaker: Lin Shuheng, Assistant Professor, Department of International Economics and Business, Xiamen University
Date: December 29, 2016
Time: 13:30 pm
Location: B423 Juxian Hall, Zhixin Building, Central Campus
Sponsor: the School of Economics
This paper uses a dynamic structural model to study firms' decisions on whether to conduct research in house, with external units or via both modes. Productivity is modeled to evolve endogenously according to firms' internal and external R&D decisions, while the costs of starting and continuing research are random and differ by R&D modes. Model estimates from a panel of Chinese manufacturing firms show that startup cost for either mode is significantly more than continuation cost; in house R&D is cheaper to maintain but costs more at startup than external R&D. These estimates can explain the observed cross-sectional differences in firm size by research status and can match the persistence and transition dynamics in R&D modes overlooked in existing studies. Lastly, simulation exercises show that continuation cost reduction induces more changes in R&D organization, but start up cost reduction leads to the most aggregate productivity gain, more than half of which comes from adjustment along external R&D.
Lin Shuheng, assistant professor of School of Economics and The Wang Yanan Institute for Studies in Economics in Xiamen University. Her research fields are international industrial organization, applied microeconometrics and economic development.
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Edited by: Zhao Yan