I develop and test a model of strategic R&D investments where innovating and non-innovating firms compete on the basis of their ability to reduce costs and imitate rivals. I find that a larger proportion of non-innovating rivals stimulates cost-reducing investments and attenuates the...

We analyze the effect of patenting on R&D with a model linking a firm's R&D effort with its decision to patent, recognizing that R&D and patenting affect one another and are both driven by many of the same factors. Using survey data for the U.S. manufacturing sector, we estimate the increment to...