Estimating Spillovers from Publicly Funded R&D

Spillovers increase innovation

11 mins
What is it about?



The spillovers of research and development (R&D) are one of the most cited motivations for government intervention in the markets for innovation. If policymakers neglect to account for the fact that ideas from one inventor may lead other inventors to create additional new ideas, and thus exponential social value, they are likely to write policy that leads to suboptimal investment in R&D. Understanding the magnitude of R&D spillovers has been a longstanding empirical question, but despite this importance, empirical evidence on the magnitude and nature of these spillovers is remarkably thin.