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This study investigates the relationship between R&D expenses and profitability for a panel of U.S. firms in the energy sector. The analysis, spanning the period 1990–2011, differentiates the energy sector into two groups: firms that sell fossil energy sources to generate electricity and firms that sell renewable energy sources to generate electricity. The empirical findings show that R&D expenses have a stronger impact on profitability in the group of firms that sell renewable energy sources.

The Role of R&D Expenses for Profitability: Evidence from U.S. Fossil and Renewable Energy Firms