[PEN-L:1198] Return on R&D - Cobb-Douglas macro production function

[Anders Ekeland <anders.ekeland@xxxxxxxxx>]

I am in the process of writing a small and non-mathematical survey paper on
returns to R&D and a natural starting point was the the newly published
collection of articles by Zvi Griliches "R&D and productivity".

Reading it I felt a strong need for a detailed exposition/critique of the
Cobb-Douglas production function. Something like Anwar Shaiks paper
published in the Ed. Nell anthology in honor of Joan Robinson. Only more
detailed and preferably adressing the work of Zvi Griliches and Co. Not that
ZG is uncritical, he becomes progressively more and more aware of the
limitations of the C-D approach.

But still I feel sceptical to the use of C-D for various reasons:
-the heterogeniety of firms

- the time dimension of R&D projects

- the very skewed distribution of success (most small firms die - how is
that accounted for)

- what about investment cycles (everybody is now investing heavily in R&D -
substantial benefits are years ahead).

For short: I have a lot of naive questions about the use of C-D in general
and also for this particular purpose. Is C-D really a valid approach to the
measuring the return on R&D?

All hints are welcome.

Regards
Anders Ekeland