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Innovations, patent races and endogenous growth

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  • Joseph Zeira

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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  • Joseph Zeira, 2011. "Innovations, patent races and endogenous growth," Journal of Economic Growth, Springer, vol. 16(2), pages 135-156, June.
  • Handle: RePEc:kap:jecgro:v:16:y:2011:i:2:p:135-156
    DOI: 10.1007/s10887-011-9066-1
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    Cited by:

    1. Maria Rosaria Carillo & Erasmo Papagni, 2013. "Is the ‘Globalization’ of Science Always Good for Scientific Productivity and Economic Growth?," Metroeconomica, Wiley Blackwell, vol. 64(4), pages 607-644, November.
    2. 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.
    3. 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, June.
    4. Ricottilli, Massimo, 2015. "Innovation through local interaction, imitation and investment waves," Structural Change and Economic Dynamics, Elsevier, vol. 33(C), pages 58-70.
    5. Färnstrand Damsgaard, Erika, 2009. "Patent Scope and Technology Choice," Working Paper Series 792, Research Institute of Industrial Economics.
    6. Burgi, Constantin & Gorgulu, Nisan, 2021. "The Impact of the Spatial Population Distribution on Economic Growth," Working Papers 17-2021, Copenhagen Business School, Department of Economics.
    7. Federico Etro, 2006. "Market Leaders and Industrial Policy," Working Papers 103, University of Milano-Bicocca, Department of Economics, revised Nov 2006.
    8. 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.
    9. Ghiglino, Christian & Tabasso, Nicole, 2016. "Risk aversion in a model of endogenous growth," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 30-40.
    10. Barbara Annicchiarico & Valentina Antonaroli & Alessandra Pelloni, 2020. "Optimal Factor Taxation in A Scale Free Model of Vertical Innovation," Working Paper series 20-20, Rimini Centre for Economic Analysis.
    11. 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.
    12. Federico Etro, 2004. "Innovation by leaders," Economic Journal, Royal Economic Society, vol. 114(495), pages 281-303, April.
    13. Harashima, Taiji, 2020. "Why Is Risk Aversion Essentially Important for Endogenous Economic Growth?," MPRA Paper 101011, University Library of Munich, Germany.

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    More about this item

    Keywords

    Innovations; Patent races; Endogenous growth; Duplication; O31; O40;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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