Cardiff University | Prifysgol Caerdydd ORCA
Online Research @ Cardiff 
WelshClear Cookie - decide language by browser settings

Resource misallocation in the presence of R&D spillovers

Li, Kun, Azacis, Helmuts ORCID: and Luintel, Kul ORCID: 2023. Resource misallocation in the presence of R&D spillovers. [Working Paper]. Cardiff Economics, Cardiff: Cardiff Business School. Available at:

[thumbnail of Misallocation 2023 September 12.pdf] PDF - Submitted Pre-Print Version
Download (682kB)


We study resource misallocation by explicitly modelling R&D input and knowledge spillovers. The effects of R&D and spillovers on firm-level productivity are extensively studied in applied work, but not in the context of resource misallocation. We establish that, in the presence of spillovers, efficient resource allocation requires that more productive firms face higher R&D input prices. Analysing UK firm-level data, we find that the output gains from correcting misallocation are greatly overestimated when spillovers are ignored. Output losses due to capital distortions dominate those from labour and R&D inputs. Adopting a wrong R&D policy could lead to significant output losses.

Item Type: Monograph (Working Paper)
Date Type: Submission
Status: Submitted
Schools: Business (Including Economics)
Publisher: Cardiff Business School
Last Modified: 10 Feb 2024 02:30

Actions (repository staff only)

Edit Item Edit Item


Downloads per month over past year

View more statistics