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Innovations, Patent Races, and Endogenous Growth

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  • Zeira, Joseph

    (Hebrew U of Jerusalem, Harvard U and CEPR)

Abstract

This paper presents a model of innovations and economic growth, which departs from standard endogenous growth models by assuming that the set of potential projects for innovation in each period is limited. The model differs in a number of results from former endogenous growth models. First, it explains patent races, where many research teams search for the same potential innovation. Second, the rate of growth of the economy is bounded and does not rise too much with the scale of the economy. Namely, the model gives rise to a non-linear relationship between the size of the R&D sector and the rate of growth. Third, R&D is Pareto-inefficient, as there are too many research teams searching for the same breakthrough. This problem increases with scale. Fourth, concentration of R&D by monopolistic firms is explained in this model by risk aversion.

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Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp02-047.

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Date of creation: Nov 2002
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Handle: RePEc:ecl:harjfk:rwp02-047

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  1. John C. Williams & Charles I. Jones, 1995. "Too much of a good thing? The economics of investment in R&D," Finance and Economics Discussion Series 95-39, Board of Governors of the Federal Reserve System (U.S.).
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Cited by:
  1. 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.
  2. Färnstrand Damsgaard, Erika, 2009. "Patent Scope and Technology Choice," Working Paper Series 792, Research Institute of Industrial Economics.
  3. 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.
  4. Maria Rosaria Carillo & Erasmo Papagni & Fabian Capitanio, 2008. "Effects of social interactions on scientists' productivity," International Journal of Manpower, Emerald Group Publishing, vol. 29(3), pages 263-279, July.
  5. 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.
  6. Federico Etro, 2004. "Innovation by leaders," Economic Journal, Royal Economic Society, vol. 114(495), pages 281-303, 04.
  7. 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.
  8. Federico Etro, 2006. "Market Leaders and Industrial Policy," Working Papers 103, University of Milano-Bicocca, Department of Economics, revised Nov 2006.

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