THE EFFECTS OF PUBLIC INFRASTRUCTURE AND RESEARCH-AND-DEVELOPMENT CAPITAL ON THE COST-STRUCTURE AND PERFORMANCE OF UNITED-STATES MANUFACTURING-INDUSTRIES

In this paper we examine the effects of publicly financed infrastructu re and R&D capitals on the cost structure and productivity performance of twelve two-digit U.S. manufacturing industries. The results sugges t that there are significant productive effects from these two types o f capital. Their effects on the cost structure vary across industries. Not only is the cost function shifted downward in each industry, gene rating productivity inducement, but the factor demand in each industry is also affected by the two types of public capital suggesting bias e ffects. We also calculate the marginal benefits of the two types of pu blic capital services in each industry and estimate the ''social'' rat es of return to these capitals for the industries in our sample.