Spillovers and Crowding Effects in a Mixed Biotech Industry: The Case of Canola

Abstract

This paper develops empirical models to estimate both interfirm research spillovers and crowding effects in the canola crop research industry. The potential sources of spillover include basic research, human capital/knowledge (as measured through other-firm expenditures), and genetics (as measured through yields of other firms). The model used to examine spillover effects on research productivity provides evidence that there are many positive interfirm nonpecuniary research spillovers, which is consistent with a research clustering effect. The second model, which uses additional data on firm revenue to estimate crowding effects, shows that although private firms tend to crowd one another, public-firm expenditure on basic and applied research creates a “crowding-in” effect for private firms. This model also shows that enhanced intellectual property rights have increased the revenues of private firms.