Martin Schiller wrote:
> In a message of 7/22/99 4:39 PM from Brad De Long,
> <mailto:delong at econ.Berkeley.EDU>
>
> >Yeah. But where are the profits going to come from? Profits from R&D
> >arise only if the R&D allows you to set up some very strong barriers
> >to entry behind which you can shelter. And I can't figure out what
> >those are going to be...
>
> Why does the profit or the value have to accrue to the original investor
> or developer (I mean for practical reasons, not just because they *want*
> it?) Knowledge is only valuable in relation to how widely it's broadcast.
> Widely broadcast, widely used and widely productive.
>
> There are no secrets in Silicon Valley, but there is an economy of
> setting up "some very strong barriers". That's counterproductive activity.
>
In US most of the R&D is made by private firms so there are externalities and appropriation problem that limit the productive capacity of innovative activities. In case of private R&D "some very strong barriers" are needed to overcome these problems. But public R&D has some drawbacks too. Slicon Valley is an exception like Third Italy. In addition R&D is also the most important input for organizational innovations which is used to decrease costs and increase explotation. This issue is also important for understanding "network economy"
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