We develop a simple Cournot type, two-stage competition model that reveals that firms tend to reduce their R&D investment more in denser locations than in lesser ones with the presence of knowledge spillover. This implies that local agglomeration increases the negative impact of knowledge...

We propose a new methodology to estimate empirically the input price-induced technical change and total factor productivity (TFP) growth in China. Our primary goal is to test Hicks' induced innovation hypothesis by examining whether technical change in China has been induced by sharp increase in...