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The Impact of Public Policies on Innovation and Imitation: The Role of R&D Technology in Growth Models

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  • Cheng, Leonard K
  • Tao, Zhigang

Abstract

It has been shown under the assumption of linear R&D technology that a government subsidy to imitative (innovative) R&D decreases (increases) imitative effort but increases (decreases) innovative effort, and that strengthening the enforcement of patent laws leads to a decrease in innovative R&D but to an increase in imitative R&D. By replacing the linear R&D technology with a sufficiently convex R&D technology, we have shown that the counter-intuitive results are reversed. In the case of linear R&D technology, the socially optimal R&D policies and activities are indeterminate, but with convex R&D technology, optimal innovation and imitation subsidies would induce the market to generate socially "balanced" innovative and imitative activities. Copyright 1999 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Cheng, Leonard K & Tao, Zhigang, 1999. "The Impact of Public Policies on Innovation and Imitation: The Role of R&D Technology in Growth Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 187-207, February.
  • Handle: RePEc:ier:iecrev:v:40:y:1999:i:1:p:187-207
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    Cited by:

    1. Tapio Palokangas, 2006. "Competition, Imitation and Growth with Non-Diversifiable Risk," DEGIT Conference Papers c011_036, DEGIT, Dynamics, Economic Growth, and International Trade.
    2. Stadler, Manfred, 2015. "Innovation, industrial dynamics and economic growth," University of Tuebingen Working Papers in Economics and Finance 84, University of Tuebingen, Faculty of Economics and Social Sciences.
    3. Tapio Palokangas, 2005. "Optimal Technology Policy with Imitation and Risk-Averting Households," DEGIT Conference Papers c010_011, DEGIT, Dynamics, Economic Growth, and International Trade.
    4. repec:kap:jeczfn:v:123:y:2018:i:3:d:10.1007_s00712-017-0568-y is not listed on IDEAS
    5. Amy Glass, 1999. "Substitution and Returns to Scale in R&D," Working Papers 99-12, Ohio State University, Department of Economics.
    6. Glass, Amy Jocelyn, 2003. "Substitution in R&D across countries," Japan and the World Economy, Elsevier, vol. 15(4), pages 373-390, December.
    7. Tibor Erményi, 2015. "Evaluating Investment Profitability and Business Controlling Methods," Volume of Management, Enterprise and Benchmarking in the 21st century II, Óbuda University, Keleti Faculty of Business and Management.

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