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Innovations, Patent Races and Endogenous Growth

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  • Zeira, Joseph

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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3974.

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Date of creation: Jul 2003
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Handle: RePEc:cpr:ceprdp:3974

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Keywords: endogenous growth; innovations; patent races; R&D sector;

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References

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Citations

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Cited by:
  1. Färnstrand Damsgaard, Erika, 2009. "Patent Scope and Technology Choice," Working Paper Series 792, Research Institute of Industrial Economics.
  2. Maria Rosaria Carillo & Erasmo Papagni, 2006. "Academic Research, Social Interactions and Economic Growth," Discussion Papers 9_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
  3. Federico Etro, 2006. "Market Leaders and Industrial Policy," Working Papers 103, University of Milano-Bicocca, Department of Economics, revised Nov 2006.
  4. Maria Rosaria Carillo & Erasmo Papagni & Fabian Capitanio, 2006. "Effects of social interactions on Scientists’ productivity," Discussion Papers 19_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
  5. 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.
  6. Federico Etro, 2004. "Innovation by leaders," Economic Journal, Royal Economic Society, vol. 114(495), pages 281-303, 04.
  7. 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.

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