A new method for constructing R&D capital stocks is proposed. Following Schumpeter, the development of R&D capital stocks is modelled as a process of creative destruction. Newly generated knowledge is assumed not only to add to the existing R&D capital stocks but also, by displacing old...

This paper describes a classroom experiment that illustrates the research and development investment incentives facing firms when technological spillovers are present. The game involves two stages in which student sellers first make investment decisions then production decisions. The classroom...