Estimating firm size elasticities of product and process R&D

J. Inkmann

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper provides an empirical test of the particular product life-cycle hypothesis which postulates that the firm size elasticity of process R&D exceeds the firm size elasticity of product R&D. Panel data on German manufacturing firms is used which is affected by attrition and sample selection. An inverse probability weighted generalized empirical likelihood (GEL) estimator is proposed, which corrects for the selectivity bias under the identifying assumption of conditionally independent selection and benefits from the superior small sample bias properties of GEL compared to generalized method of moments (GMM). The product life-cycle hypothesis is clearly rejected in all specifications.
Original languageEnglish
Pages (from-to)384-402
JournalEconomica
Volume77
Issue number306
Publication statusPublished - 2010

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Elasticity
Life cycle hypothesis
Firm size
Product lifecycle
Generalized empirical likelihood
Manufacturing firms
Attrition
Selectivity bias
Empirical test
Small sample bias
Sample selection
Estimator
Generalized method of moments
Panel data

Cite this

Inkmann, J. / Estimating firm size elasticities of product and process R&D. In: Economica. 2010 ; Vol. 77, No. 306. pp. 384-402.
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Inkmann, J 2010, 'Estimating firm size elasticities of product and process R&D', Economica, vol. 77, no. 306, pp. 384-402.

Estimating firm size elasticities of product and process R&D. / Inkmann, J.

In: Economica, Vol. 77, No. 306, 2010, p. 384-402.

Research output: Contribution to journalArticleScientificpeer-review

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T1 - Estimating firm size elasticities of product and process R&D

AU - Inkmann, J.

N1 - Appeared earlier as CentER DP 2005-131 (revised title)

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N2 - This paper provides an empirical test of the particular product life-cycle hypothesis which postulates that the firm size elasticity of process R&D exceeds the firm size elasticity of product R&D. Panel data on German manufacturing firms is used which is affected by attrition and sample selection. An inverse probability weighted generalized empirical likelihood (GEL) estimator is proposed, which corrects for the selectivity bias under the identifying assumption of conditionally independent selection and benefits from the superior small sample bias properties of GEL compared to generalized method of moments (GMM). The product life-cycle hypothesis is clearly rejected in all specifications.

AB - This paper provides an empirical test of the particular product life-cycle hypothesis which postulates that the firm size elasticity of process R&D exceeds the firm size elasticity of product R&D. Panel data on German manufacturing firms is used which is affected by attrition and sample selection. An inverse probability weighted generalized empirical likelihood (GEL) estimator is proposed, which corrects for the selectivity bias under the identifying assumption of conditionally independent selection and benefits from the superior small sample bias properties of GEL compared to generalized method of moments (GMM). The product life-cycle hypothesis is clearly rejected in all specifications.

M3 - Article

VL - 77

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EP - 402

JO - Economica

JF - Economica

SN - 0013-0427

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