Agricultural Economics, Department of
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Document Type
Article
Date of this Version
7-14-2008
Abstract
The internal rate of return (IRR) to public investment in agricultural R&D is estimated for each of the continental U.S. states. Theoretically, our contribution provides a way of obtaining the returns to a local public good using Rothbart’s concept of virtual prices. Empirically, we use the spatial dependency among states generated by knowledge spillovers to define the ‘appropriate’ jurisdiction. We estimate an average own-state rate of 17% and a social rate of 29%. These figures should inform the policy debate on the allocation of federal funds to research in the actual food crisis environment.
Comments
Data set used in this manuscript can be found at: http://www.agecon.unl.edu/facultystaff/directory/fulginiti.html