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Social value of innovations, distortions, and R?D investments :first best versus second best equilibria in growth models

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  • André Grimaud
  • Frédéric Tournemaine

Abstract

In this paper, we combine together elements from the literature on endogenous growth and on funding of innovations developed by authors such as Arrow [1962], Tirole [1988], Scotchmer [1991,1999], Dasgupta et al. [1996], Gallini and Scotchmer [2003]. We shed a new light on several questions often studied in these literatures. The first one is related to the social value of innovations. The second one concerns the distortions that prevent the decentralized economy to be optimal. The third one concerns insufficient investments which are observed in research.

Suggested Citation

  • André Grimaud & Frédéric Tournemaine, 2006. "Social value of innovations, distortions, and R?D investments :first best versus second best equilibria in growth models," Revue d'économie politique, Dalloz, vol. 116(1), pages 5-22.
  • Handle: RePEc:cai:repdal:redp_161_0005
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    References listed on IDEAS

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    1. Nancy Gallini & Suzanne Scotchmer, 2002. "Intellectual Property: When Is It the Best Incentive System?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 51-78, National Bureau of Economic Research, Inc.
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    8. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    9. Charles I. Jones & John C. Williams, 1998. "Measuring the Social Return to R&D," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1119-1135.
    10. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, September.
    11. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    12. Maria Freire-Serén, 2001. "R&D-expenditure in an endogenous growth model," Journal of Economics, Springer, vol. 74(1), pages 39-62, February.
    13. Sandmo, Agnar, 1972. "Optimality rules for the provision of collective factors of production," Journal of Public Economics, Elsevier, vol. 1(1), pages 149-157, April.
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    Cited by:

    1. Étienne Chantrel & Andre Grimaud & Frederic Tournemaine, 2012. "Pricing Knowledge and Funding Research of New Technology Sectors in a Growth Model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(3), pages 493-520, June.

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    More about this item

    Keywords

    social value of an innovation; complete markets; distortions;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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