The Review of Economics and Statistics Vol. 72 No. 2 1990
How Risky is R an D? A Financial Approach
Abstract
In order to understand the relationship between market structure and the risk of innovation, this paper proposes a synthesis between the capital asset pricing model and simple models of industrial organization. The theoretical section of the paper discusses the real determinants of R&D riskiness, finding that several unique features of R&D assets may influence their systematic risk, including their strategic nature and random arrival as well as the firm's industry context. The empirical results suggest that there is a considerable systematic risk premium associated with R&D that can be partially offset by firm size and market concentration.
- DOI
- 10.2307/2109719
- Volume
- 72
- Issue
- 2
- Pages
- 296
- Sources
- crossref openalex