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Innovations, patent races and endogenous growth

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  • Joseph Zeira

Abstract

This Paper presents a model of innovations and economic growth, in which patent rates emerge endogenously, as a result of two assumptions: first, R&D is innovation-specific, second, marginal cost of innovation is increasing. The Paper then examines the effects of patent races on growth, welfare, and the market structure of R&D, and derives three main results. The first is that patent races reduce significantly the effect of scale on growth. The second result is that R&D is Pareto-inefficient, as too many researchers look for the easy innovations, while too few search for the difficult ones. The third result is that risk aversion leads to concentration of R&D in few firms, to reduce risk of patent race. Interestingly this does not contribute to growth but rather to more duplication.
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  • Joseph Zeira, 2011. "Innovations, patent races and endogenous growth," Journal of Economic Growth, Springer, vol. 16(2), pages 135-156, June.
    • Handle: RePEc:kap:jecgro:v:16:y:2011:i:2:p:135-156
    DOI: 10.1007/s10887-011-9066-1
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    Cited by:

    1. Maria Rosaria Carillo & Erasmo Papagni, 2013. "Is the ‘Globalization’ of Science Always Good for Scientific Productivity and Economic Growth?," Metroeconomica, Wiley Blackwell, vol. 64(4), pages 607-644, November.
    2. Moscone, Francesco & Tosetti, Elisa & Costantini, Marco & Ali, Maged, 2013. "The impact of scientific research on health care: Evidence from the OECD countries," Economic Modelling, Elsevier, vol. 32(C), pages 325-332.
    3. Maria Rosaria Carillo & Erasmo Papagni & Fabian Capitanio, 2008. "Effects of social interactions on scientists' productivity," International Journal of Manpower, Emerald Group Publishing Limited, vol. 29(3), pages 263-279, June.
    4. Ricottilli, Massimo, 2015. "Innovation through local interaction, imitation and investment waves," Structural Change and Economic Dynamics, Elsevier, vol. 33(C), pages 58-70.
    5. Färnstrand Damsgaard, Erika, 2009. "Patent Scope and Technology Choice," Working Paper Series 792, Research Institute of Industrial Economics.
    6. Etro, Federico, 2008. "Growth leaders," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1148-1172, September.
    7. Nicholas Bloom & Charles I. Jones & John Van Reenen & Michael Webb, 2020. "Are Ideas Getting Harder to Find?," American Economic Review, American Economic Association, vol. 110(4), pages 1104-1144, April.
    8. Burgi, Constantin & Gorgulu, Nisan, 2021. "The Impact of the Spatial Population Distribution on Economic Growth," Working Papers 17-2021, Copenhagen Business School, Department of Economics.
    9. Federico Etro, 2006. "Market Leaders and Industrial Policy," Working Papers 103, University of Milano-Bicocca, Department of Economics, revised Nov 2006.
    10. Maria Rosaria Carillo & Erasmo Papagni, 2004. "Academic Research, Social Interactions And Economic Growth," Working Papers 10_2004, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    11. Ghiglino, Christian & Tabasso, Nicole, 2016. "Risk aversion in a model of endogenous growth," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 30-40.
    12. Barbara Annicchiarico & Valentina Antonaroli & Alessandra Pelloni, 2022. "Optimal factor taxation in a scale free model of vertical innovation," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 794-830, April.
    13. Constantin Bürgi & Nisan Gorgulu, 2022. "The Impact of the Spatial Population Distribution on Economic Growth: Evidence from the United States," CESifo Working Paper Series 10008, CESifo.
    14. Ivan D. Breslavsky, 2017. "Effect of Intellectual Property Policy on the Speed of Technological Advancement," Papers 1706.04518, arXiv.org.
    15. Cecilia García-Peñalosa & Jean-François Wen, 2008. "Redistribution and entrepreneurship with Schumpeterian growth," Journal of Economic Growth, Springer, vol. 13(1), pages 57-80, March.
    16. Federico Etro, 2004. "Innovation by leaders," Economic Journal, Royal Economic Society, vol. 114(495), pages 281-303, April.
    17. Harashima, Taiji, 2020. "Why Is Risk Aversion Essentially Important for Endogenous Economic Growth?," MPRA Paper 101011, University Library of Munich, Germany.

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    More about this item

    Keywords

    Innovations; Patent races; Endogenous growth; Duplication; O31; O40;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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