Self-financing of an R and D project

Journal Article · Thu Jun 01 00:00:00 EDT 1978 · Am. Econ. Rev.; (United States)

OSTI ID:7060680

Kamien, M I; Schwartz, N L

Traditional internal financing of industrial research and development (R and D) is examined in terms of the empirical evidence that it may not be conducive to innovation. A theoretical case study of an established firm considering new product development indicates that cash would only be constrained for projects involving significant innovation or excessive new profits. Most R and D projects can be financed from current profits. When cash is constrained, the balance is single-peaked and declines to zero when the project is completed. The results also indicate that financial limitations would not be the deciding factor in the case of an unrivaled innovation, although the pace of R and D might be slower. R and D was found to accelerate in the case of large anticipated reward and minimal effort. 9 references.

• Research Organization: Northwestern Univ., Evanston, IL
• OSTI ID: 7060680
• Journal Information: Am. Econ. Rev.; (United States), Vol. 68:3
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING
POLICY AND ECONOMY
INDUSTRY
RESEARCH PROGRAMS
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COMPETITION
ECONOMETRICS
ECONOMIC ANALYSIS
ECONOMIC ELASTICITY
INCOME
INVESTMENT
MONOPOLIES
ECONOMICS
290500* - Energy Planning & Policy- Research
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