Social Capital and Investment in R&D: New

We introduce social capital in an endogenous growth model with physical capital, human capital and varieties, and we compare the market with the ef-ficient solutions. As social capital is not tradable in the market and it favours research networks, it introduces new externalities in this framework. These ex-ternalities induce the market to invest less in social capital than a social planner would do and decrease the tendency to underinvestment in R&D. We quantify the distortions in the model. In some conditions, the new distortions are strong enough to overcome the usual result of underinvestment in R&D