Firm price-cost markups may reflect (a) bigger step sizes from quality
innovations that confer significant knowledge spillovers onto other firms,
and\/or (b) higher process efficiency than competing firms or other factors
which bear no obvious knowledge externality. We write down an
endogenous growth model with innovation step size and process efficiency
as alternative sources of markup heterogeneity. We then use price and
productivity data across firms in French manufacturing to infer firm step
sizes and process efficiency. We show that purely size-based R&D
subsidies, such as those seen in France, are a poor approximation to the
social planner\u2019s solution. Instead, research subsidies should favor firms
with big step sizes, whether the firms are large or small.<\/p>","protected":false},"excerpt":{"rendered":"
Firm price-cost markups may reflect (a) bigger step sizes from qualityinnovations that confer significant knowledge spillovers onto other firms,and\/or (b) higher process efficiency than competing firms or other factorswhich bear no obvious knowledge externality. We write down anendogenous growth model with innovation step size and process efficiencyas alternative sources of markup heterogeneity. We then use […]<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":true},"thematique":[49,47],"type-de-publication":[45],"class_list":["post-403","publication","type-publication","status-publish","hentry","thematique-growth","thematique-innovation","type-de-publication-working-paper"],"acf":[],"yoast_head":"\n