Nonparametric quantile regression analysis of R&D-sales relationship for Korean firms |
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Authors: | Joon-Woo Nahm |
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Institution: | (1) Department of Economics, Sogang University, C.P.O. Box 1142, Seoul, Korea E-mail: Jnahm@ccs.sogang.ac.kr, KR |
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Abstract: | This paper applies the nonparametric quantile regression estimation procedure to the analysis of the innovation-firm size
relationship using Korean manufacturing firms data. Due to the high asymmetric distribution of R&D expenditure, the mean regression
does not capture properly the stylized facts of R&D behavior; hence it underestimates the sales elasticity. Comparing the
parametric estimates and nonparametric estimates allows us to see that there exists a nonlinear relationship in innovative
activity and sales. Dividing the data into three groups according to the sales volume, the elasticity in the medium-sized
firms is the biggest for scientific firms. This result conforms that the findings of Scherer (1965) coincide with findings
from Korean manufacturing firms data in the sense that R&D expenditure tends to increase faster than firm size with size up
to a point and then more slowly among larger firms. For the non-scientific firms, it steadily increases showing increasing
returns to scale in innovative activity in large firms. |
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Keywords: | : Quantile regression Nonparametrics Average median derivative |
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