This paper studies the asset pricing implications of technology spillover, an important externality in innovation. While technology spillover enables firms to produce a variety of products that better satisfy their customers' love for variety, such benefits are procyclical, and investors...

I examine whether connected firms in the knowledge network also face additional types of risks while experiencing a net positive R&D spillover effect, as in Bloom, Schankerman, and Van Reenen (2013). Developing a measure of firm connectivity, I find that highly connected firms earn 6.6%-7.6%...