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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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Cited by:
  1. 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.
  2. Federico Etro, 2004. "Innovation by leaders," Economic Journal, Royal Economic Society, vol. 114(495), pages 281-303, 04.
  3. Carillo, Maria Rosaria & Papagni, Erasmo & Capitanio, Fabian, 2007. "Effects of social interactions on scientists' productivity," MPRA Paper 7880, University Library of Munich, Germany.
  4. 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.
  5. Christian Chiglino & Nicole Tabasso, 2014. "Risk Aversion in a Model of Endogenous Growth," School of Economics Discussion Papers 0314, School of Economics, University of Surrey.
  6. Färnstrand Damsgaard, Erika, 2009. "Patent Scope and Technology Choice," Working Paper Series 792, Research Institute of Industrial Economics.
  7. Federico Etro, 2006. "Market Leaders and Industrial Policy," Working Papers 103, University of Milano-Bicocca, Department of Economics, revised Nov 2006.
  8. 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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