TY  - JOUR
AU  - Pakes,Ariel
AU  - Schankerman,Mark
TI  - The Rate of Obsolescence Of Knowledge, Research Gestation Lags, and the Private Rate of Return to Research Resources
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 346
PY  - 1979
Y2  - May 1979
UR  - http://www.nber.org/papers/w0346
L1  - http://www.nber.org/papers/w0346.pdf
N1  - Author contact info:
Ariel Pakes
Department of Economics
Harvard University
Littauer Room 117
Cambridge, MA 02138
Tel: 617/495-5320
Fax: 617/496-7352
E-Mail: apakes@fas.harvard.edu

Mark Schankerman
Department of Economics, R.516
London School of Economics
Houghton Street
London WC2A 2AE
UK
Tel: 442079557518
E-Mail: M.Schankerman@lse.ac.uk
M1  - published as Ariel Pakes, Mark Schankerman. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources ," in Zvi Griliches, ed., "R & D, Patents, and Productivity" University of Chicago Press (1984)

AB  - This paper points out the conceptual distinction between the rates of decay in the physical productivity of traditional capital goods and that of the appropriate revenues accruing to knowledge-producing activities, and notes that it is the latter parameter which is required in any study which constructs a stock of privately marketable knowledge. The rate of obsolescence of knowledge is estimated from a simple patent renewal and the estimates are found to be comparable to evidence provided by firms on the lifespan of the output of their R&D activities. These estimates, together with mean R&D gestation lags, are then used to correct previous estimates of the private excess rate of return to investment in research. We find that after the correction, the private excess rate of return to investment in research, at least in the early 1960's, was close to zero, which may explain why firms reduced the fraction of their resources allocated to research over the subsequent decade.
ER  -