Abstract
This paper investigates the impact of inter-firm R&D and technology spillovers within three economies: the U.S., China, and Japan. For this purpose, the paper formulates a 4-equation system that measures the impact of spillovers on firm-level R&D expenditure, patent production, productivity, and the firm's Tobin Q. Using a panel of firm-level data spanning the population of publicly traded firms in our 3-country sample over the period 2011-2019, firm-level fixed effects and seemingly unrelated regression estimates calibrate the substantial impact of technology spillovers. The paper consistently finds robust spillover effects for each of the three economies and for each of the dimensions of firm performance-R&D spending, patent production, productivity, and market value. For the stock of R&D, estimates show that the social returns to R&D spending are typically double or triple the private returns. Among differences across the three countries, the US and Japan tend to show relatively similar spillover magnitudes, while those for China are typically larger and the private returns are less. We attribute these differences to two factors. The first is rapid growth, a high rate of new entry, and relatively high competition within China's fast-expanding industry; the second is the condition of relatively weak intellectual property rights across China's economy.