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on Innovation |
| By: | V.V. Chari; Mikhail Golosov; Aleh Tsyviski |
| Abstract: | Innovative activities have public good characteristics in the sense that the cost of producing the innovation is high compared to the cost of producing subsequent units. Moreover, knowledge of how to produce subsequent units is widely known once the innovation has occurred and is, therefore, non-rivalrous. The main question of this paper is whether mechanisms can be found which exploit market information to provide appropriate incentives for innovation. The ability of the mechanism designer to exploit such information depends crucially on the ability of the innovator to manipulate market signals. We show that if the innovator cannot manipulate market signals, then the efficient levels of innovation can be implemented without deadweight losses - for example, by using appropriately designed prizes. If the innovator can use bribes, buybacks, or other ways of manipulating market signals, patents are necessary. |
| Keywords: | Public goods ; Patents |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:673&r=ino |
| By: | Franz Tödtling; Michaela Trippl |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2009_02&r=ino |
| By: | Simone Valente (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland) |
| Abstract: | An established result of the endogenous growth literature is that competitive equilibria in expanding-varieties models are suboptimal due to the rent-effect: monopolistic pricing drives the equilibrium quantity of each intermediate below the efficient level, implying that it is optimal to subsidize final producers. This paper shows that, if scale effects are eliminated by including R&D spillovers in the model, normative prescriptions change. Since the laissez-faire economy under-invests into R&D activity, the share of resources devoted to intermediates' production increases, and this reallocation effect contrasts the rent-effect. In many scenarios, including the polar case of logarithmic preferences, the reallocation effect surely dominates: the equilibrium quantity of each intermediate exceeds the optimal one, and the optimal policy consists of taxing final producers because fiscal authorities must internalize the overshooting mechanism generated by under-investment in R&D. |
| Keywords: | Endogenous Growth, Scale Effects, R&D Externalities, Optimal Policy |
| JEL: | O41 O31 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:09-116&r=ino |
| By: | Nicholas Vasilakos; Nikolay Zubanov |
| Abstract: | This paper evaluates the impact of R&D investment on income convergence for a cross section of manufacturing industries in 12 OECD countries over the time period 1987-1999. We apply dynamic panel estimation techniques to obtain a speed of convergence which, when conditioned to R&D expenditure, is significantly greater than the conventional 2%. In particular, the inclusion of the R&D variable results to a speed of convergence of 7-9% per year, suggesting that convergence is faster between equally technologically advanced industries. A further implication from our results is that differences in the industry mix can be important in explaining the speed of income convergence between countries. |
| Keywords: | Income growth, beta convergence, R&D investment |
| JEL: | C33 J24 O32 O47 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:09-09&r=ino |
| By: | Aleksander Berentsen; Mariana Rojas Breu; Shouyong Shi |
| Abstract: | Many countries simultaneously suffer from high rates of inflation, low growth rates of per capita income and poorly developed financial sectors. In this paper, we integrate a microfounded model of money and finance into a model of endogenous growth to examine the effects of inflation and financial development. A novel feature of the model is that the market for innovation goods is decentralized. Financial intermediaries arise endogenously to provide liquid funds to the innovation sector. We calibrate the model to address two quantitative issues. One is the effects of an exogenous improvement in the productivity of the financial sector on welfare and per capita growth. The other is the effects of inflation on welfare and growth. Consistent with the data but in contrast to previous work, reducing inflation generates large gains in the growth rate of per capita income as well as in welfare. Relative to reducing inflation, improving the efficiency of the financial market increases growth and welfare by much smaller amounts. |
| Keywords: | Money, Credit, Innovation, Growth |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:441&r=ino |