Management and Economics Department, CEFAGE-UBI and INOVA, Universidade Nova de Lisboa, Universidade da Beira Interior (UBI), Estrada do Sineiro, 6200-209 Covilhã, Portugal
ISCTE Business School Economics Department, UNIDE and CEFAGE-UBI, University Institute of Lisbon, Avenida das Forças Armadas, 1649-026 Lisboa, Portugal
We introduce social capital in an endogenous growth model with physical capital, human capital, and research and development (R&D), and we compare the market with the efficient solutions. As social capital is not tradable in the market and since it favours research networks, it introduces new externalities in this framework. These externalities induce the market to invest less in social capital than would a social planner and decrease the tendency to underinvestment in R&D. We quantify the distortions in the model. In some conditions, the new distortions are strong enough to overcome the usual result of underinvestment in R&D.
Sequeira, T. N., & Ferreira-Lopes, A. (2013). Social capital and investment in R&D: new externalities. Journal of Business Economics and Management, 14(1), 77-97. https://doi.org/10.3846/16111699.2011.638667
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