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Abstract
Public R&D stock is considered as quasi-fixed input in a variable cost function. Its shadow price allows to measure the long run optimal level thus explicitly assessing the hypothesis of under (over) investment. Two alternative R&D prices are defined depending on whether the social or private (farmers) view prevails. The results under these alternatives provide evidence on the hypothesis that free-riding on public R&D explain overinvestment. The application to the Italian agriculture (1960-1995) suggests overinvestment in public research since the late seventies with a significant difference between the social and private optimal R&D, the former being much closer to the observed level.