RESEARCH-AND-DEVELOPMENT, SCOPE ECONOMIES, AND PLANT PERFORMANCE

This article presents an alternative specification of knowledge produc tion and derives a structural econometric model with some desirable pr operties. I provide a simple and less data-intensive framework for emp irical studies of the relationship between firm performance and R&D. T he main empirical finding are as follows: (i) R&D has a positive effec t on performance, (ii) the appropriable part of knowledge capital depr eciates at a rate of,2, (iii) there are significant spillover effects of R&D across lines of business within a firm, and (iv) there are sign ificant spillovers in R&D across firms that belong to the same interlo cking group of firms.