Credit constrained R&D spending and technological change

Aßmuth P (2015) Center for Mathematical Economics Working Papers; 532, Reviewed version June 18, 2015.
Bielefeld: Center for Mathematical Economics.

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Working Paper | Published | English
Abstract
Firms often rely on external financing in order to conduct R&D. We ask to what extent discriminatory behaviour of the funds provider affects the industry evolution. The model is based on an evolutionary framework by Nelson and Winter. A firm chooses the amount of its R&D spending in an adaptive fashion where technological improvement is essential for survival in the competitive market. Firms can finance their activities by using retained profits or applying for credit. However, they have a clear hierarchy in choosing the source of funds and saved profits are always used up first. There is endogenous discriminatory lending as the banking sector provides credit according to firms’ individual features. It compares profitability and market share across firms when assessing creditworthiness. The model is able to capture features of innovation and diffusion of technology. Results show that the availability of credit is crucial for technological change in a non-linear fashion and that the industry evolves faster if the bank focuses on market share in assessing creditworthiness.
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Aßmuth P. Credit constrained R&D spending and technological change. Center for Mathematical Economics Working Papers. Vol 532 Reviewed version June 18, 2015. Bielefeld: Center for Mathematical Economics; 2015.
Aßmuth, P. (2015). Credit constrained R&D spending and technological change (Center for Mathematical Economics Working Papers, 532) Reviewed version June 18, 2015. Bielefeld: Center for Mathematical Economics.
Aßmuth, P. (2015). Credit constrained R&D spending and technological change. Center for Mathematical Economics Working Papers, 532, Reviewed version June 18, 2015. Bielefeld: Center for Mathematical Economics.
Aßmuth, P., 2015. Credit constrained R&D spending and technological change, Center for Mathematical Economics Working Papers, no.532, Reviewed version June 18, 2015., Bielefeld: Center for Mathematical Economics.
P. Aßmuth, Credit constrained R&D spending and technological change, Center for Mathematical Economics Working Papers, vol. 532, Reviewed version June 18, 2015., Bielefeld: Center for Mathematical Economics, 2015.
Aßmuth, P.: Credit constrained R&D spending and technological change. Center for Mathematical Economics Working Papers, 532, Reviewed version June 18, 2015. Center for Mathematical Economics, Bielefeld (2015).
Aßmuth, Pascal. Credit constrained R&D spending and technological change. Reviewed version June 18, 2015. Bielefeld: Center for Mathematical Economics, 2015. Center for Mathematical Economics Working Papers. 532.
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