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Abstract
The effects of functional forms for supply and demand on the size and distribution of the returns to research are examined
under a range of forms of competition. Under perfect competition, the choice of functional form is relatively unimportant for
the estimation of research benefits. Under imperfect competition, the combination of the choice of functional forms for supply
and demand and the nature of the research-induced supply shift can have profound implications for the results. Functional
form plays a much more important role than in the competitive model. The most important contrast is between the constant
elasticity model and the linear model (along with various cases of a generalized linear model). These findings are illustrated
using a combination of analytical results and numerical simulations. © 1999 Elsevier Science B.V. All rights reserved.