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Invention and Innovation Under Alternative Market Structures: The Case of Natural Resources

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  • Partha Dasgupta
  • Richard J. Gilbert
  • Joseph E. Stiglitz

Abstract

This paper examines the interactions between market structure and resource allocation over time when there is endogenous technical progress. The structures considered are a planned economy, pure monopoly, and competition with patent rights. In an efficient allocation the date of invention coincides with the date of innovation (the date at which technology is used). This is also true with a pure monopoly, but monopoly retards technical progress relative to the efficient level. Competition for patents rights to a new technology results in excessively rapid technical progress if the resource endowment of the economy is sufficiently large. Also, competition may lead to "sleeping patents" where invention strictly precedes the date of innovation.

Suggested Citation

  • Partha Dasgupta & Richard J. Gilbert & Joseph E. Stiglitz, 1982. "Invention and Innovation Under Alternative Market Structures: The Case of Natural Resources," Review of Economic Studies, Oxford University Press, vol. 49(4), pages 567-582.
  • Handle: RePEc:oup:restud:v:49:y:1982:i:4:p:567-582.
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    File URL: http://hdl.handle.net/10.2307/2297287
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    Cited by:

    1. Chakravorty, Ujjayant & Leach, Andrew & Moreaux, Michel, 2008. ""Twin Peaks" in Energy Prices: A Hotelling Model with Pollution and Learning," IDEI Working Papers 52, Institut d'Économie Industrielle (IDEI), Toulouse.
    2. Carolyn Fischer, 2005. "Competition in Markets for Depletable Resources with Setup Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(3), pages 243-257, March.
    3. Moreaux, Michel & Ricci, Francesco, 2005. "The simple analytics of developing resources from resources," Resource and Energy Economics, Elsevier, vol. 27(1), pages 41-63, January.
    4. Wang, Min, 2010. "Essays on Environment, Natural Resource, Growth and Development," ISU General Staff Papers 201001010800002824, Iowa State University, Department of Economics.
    5. Chakravorty, Ujjayant & Leach, Andrew & Moreaux, Michel, 2012. "Cycles in nonrenewable resource prices with pollution and learning-by-doing," Journal of Economic Dynamics and Control, Elsevier, vol. 36(10), pages 1448-1461.
    6. Sweeney, James L., 1993. "Economic theory of depletable resources: An introduction," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 17, pages 759-854 Elsevier.
    7. Lawrence H. Goulder & Marc S. Robinson, 1982. "Synfuels: Justifications for and Consequences of Government Intervention," UCLA Economics Working Papers 272, UCLA Department of Economics.
    8. Chakravorty, Ujjayant & Leach, Andrew & Moreaux, Michel, 2009. ""Twin Peaks" in Energy Prices: A Hotelling Model with Pollution Learning," Working Papers 2009-10, University of Alberta, Department of Economics.
    9. Francesco Laforgia & Fabio Montobbio & Luigi Orsenigo, 2007. "IPRs, technological and industrial development and growth: the case of the pharmaceutical industry," KITeS Working Papers 206, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Oct 2007.
    10. Ollinger, Michael & Fernandez-Cornejo, Jorge, 1998. "Sunk costs and regulation in the U.S. pesticide industry," International Journal of Industrial Organization, Elsevier, vol. 16(2), pages 139-168, March.
    11. CHAKRAVORTY Ujjayant & LEACH Andrew & MOREAUX Michel, 2008. ""Twin Peaks" in Energy Prices: A Polluting Fossil Fuel with Learning in the Clean Substitute," LERNA Working Papers 08.15.259, LERNA, University of Toulouse.
    12. Wang, Min & Zhao, Jinhua, 2013. "Monopoly extraction of a nonrenewable resource facing capacity constrained renewable competition," Economics Letters, Elsevier, vol. 120(3), pages 503-508.
    13. Fischer, Carolyn & Laxminarayan, Ramanan, 2005. "Sequential development and exploitation of an exhaustible resource: do monopoly rights promote conservation?," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 500-515, May.
    14. Robin Mason & Timothy Swanson, "undated". "Entry Deterrence and Environmental Regulation," Economics Papers 1997-W9, Economics Group, Nuffield College, University of Oxford.
    15. Hübner Marion, 2002. "Sleeping Process Patents and Environmental Innovation / Umweltpolitik und schlafende Patente," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 222(6), pages 706-718, December.
    16. repec:eee:eecrev:v:95:y:2017:i:c:p:23-37 is not listed on IDEAS
    17. Michael Reksulak & William F. Shughart & Robert D. Tollison, 2008. "Innovation and the opportunity cost of monopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(8), pages 619-627.
    18. Mason, Robin & Swanson, Timothy, 2002. "The costs of uncoordinated regulation," European Economic Review, Elsevier, vol. 46(1), pages 143-167, January.
    19. Ivan Ledezma, 2008. "Defensive strategies in the quality ladders," Working Papers halshs-00586709, HAL.
    20. Takalo, Tuomas & Kanniainen, Vesa, 2000. "Do patents slow down technological progress?: Real options in research, patenting, and market introduction," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 1105-1127, October.

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