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Legal Institutions, Innovation and Growth

  • Anderlini, Luca
  • Felli, Leonardo
  • Immordino, Giovanni
  • Riboni, Alessandro

We analyze the relationship between legal institutions, innovation and growth. We compare a rigid (law set ex-ante) legal system and a exible one (law set after observing current technology). The exible system dominates in terms of welfare, amount of innovation and output growth at intermediate stages of technological development - periods when legal change is needed. The rigid system is preferable at early stages of technological development, when (lack of) commitment problems are severe. For mature technologies the two legal systems are equivalent. We nd that rigid legal systems may induce excessive (greater than rst-best) R&D investment and output growth.

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Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/7722.

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Date of creation: 2011
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Publication status: Published in Cahier de recherche FBF Chaire de Finance d'entreprise, 2011
Handle: RePEc:dau:papers:123456789/7722
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  1. Diego Comin & Bart Hobijn, 2005. "Lobbies and Technology Diffusion," NBER Working Papers 11022, National Bureau of Economic Research, Inc.
  2. Anderlini, Luca & Felli, Leonardo & Riboni, Alessandro, 2011. "Why Stare Decisis?," CEPR Discussion Papers 8266, C.E.P.R. Discussion Papers.
  3. Immordino, Giovanni & Pagano, Marco & Polo, Michele, 2011. "Incentives to innovate and social harm: Laissez-faire, authorization or penalties?," Journal of Public Economics, Elsevier, vol. 95(7), pages 864-876.
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  8. Comin, D. & Hobijn, B., 2004. "Cross-country technology adoption: making the theories face the facts," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 39-83, January.
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  11. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2002. "Law and finance : why does legal origin matter?," Policy Research Working Paper Series 2904, The World Bank.
  12. B. Zorina Khan & Kenneth L. Sokoloff, 2001. "The Early Development of Intellectual Property Institutions in the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 233-246, Summer.
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