The price tag of technologies and the ‘unobserved’ R&D capabilities of firms

In this work, we develop and apply a methodology to estimate technology-specific R&D investments at the firm level. To do so, we combine R&D investment with patent data for the world top R&D investors worldwide and show that investment per patent varies greatly across technologies and across firms developing a given technology. We then use these results to assess the relationship between technology-specific R&D investments and a series of factors characterizing technological development. The estimation strategy makes use of a multilevel framework that allows modelling heterogeneity at the firm and sector level. In line with the literature on the sectoral systems of innovation, we find that sector specificities matter in determining the price of technologies, economies of scale in knowledge production, and the cost associated to specialization. Moreover, our results suggest that the persistent differences in R&D intensity across firms are related to the technological choices they make. Firms' idiosyncrasies co-exist with significant differences across sectors in shaping knowledge production functions. Implications for policy and research are discussed accordingly.