Center for Economic Research, Department of Economics, University of Minnesota
Firms do product R&D (making new and better products) as well
as process R&D (making cheaper products). There is evidence that
firms devote an increasing share of R&D to process R&D over the
life cycle of a product. There is also evidence that over time, the
composition of buyers of a product shifts towards the lower end of the
market. This paper distinguishes product and process R&D in terms
of their relationship to the composition of buyers of a product. It uses
this distinction to link the aforementioned facts and to explain the
change in R&D composition over time.
Saha, S., (1999), "R&D Composition over the Product Life Cycle", Discussion Paper No. 309, Center for Economic Research, Department of Economics, University of Minnesota.
R&D Composition over the Product Life Cycle.
Center for Economic Research, Department of Economics, University of Minnesota.
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