Although spillovers are a crucial factor in determining the optimal environment for innovation, there is no consensus regarding their impact on firm behavior. One reason for this may be that models differ in their assumptions for the functional form of the spillover pool. In industrial...

Absorptive capacity is the principle that assimilating new knowledge requires prior knowledge. The attendant prescription is to invest more in R& D to derive greater benefit from the R& D of others (spillovers). Empirical tests of R& D productivity typically find absorptive capacity (R& D *...