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Innovations, Patent Races, and Endogenous Growth

  • Zeira, Joseph

    (Hebrew U of Jerusalem, Harvard U and CEPR)

This paper presents a model of innovations and economic growth, which departs from standard endogenous growth models by assuming that the set of potential projects for innovation in each period is limited. The model differs in a number of results from former endogenous growth models. First, it explains patent races, where many research teams search for the same potential innovation. Second, the rate of growth of the economy is bounded and does not rise too much with the scale of the economy. Namely, the model gives rise to a non-linear relationship between the size of the R&D sector and the rate of growth. Third, R&D is Pareto-inefficient, as there are too many research teams searching for the same breakthrough. This problem increases with scale. Fourth, concentration of R&D by monopolistic firms is explained in this model by risk aversion.

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Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp02-047.

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Date of creation: Nov 2002
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Handle: RePEc:ecl:harjfk:rwp02-047
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  1. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  2. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
  3. Charles I. Jones & John C. Williams, 1999. "Too Much of a Good Thing? The Economics of Investment in R&D," NBER Working Papers 7283, National Bureau of Economic Research, Inc.
  4. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May.
  5. Charles I. Jones & John C. Williams, 1997. "Measuring the social return to R&D," Finance and Economics Discussion Series 1997-12, Board of Governors of the Federal Reserve System (U.S.).
  6. Peretto, Pietro F., 1996. "Technological Change and Population Growth," Working Papers 96-28, Duke University, Department of Economics.
  7. Stokey, Nancy L, 1995. "R&D and Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 62(3), pages 469-89, July.
  8. Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
  9. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  10. Jakob Madsen, 2008. "Semi-endogenous versus Schumpeterian growth models: testing the knowledge production function using international data," Journal of Economic Growth, Springer, vol. 13(1), pages 1-26, March.
  11. Li, Chol-Won, 2001. "On the Policy Implications of Endogenous Technological Progress," Economic Journal, Royal Economic Society, vol. 111(471), pages C164-79, May.
  12. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  13. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
  14. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-91, December.
  15. Glenn C. Loury, 1976. "Market Structure and Innovation," Discussion Papers 256, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  16. Philippe Aghion & Mathias Dewatripont & Jeremy C. Stein, 2005. "Academic Freedom, Private-Sector Focus, and the Process of Innovation," Harvard Institute of Economic Research Working Papers 2089, Harvard - Institute of Economic Research.
  17. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  18. Evenson, Robert E & Kislev, Yoav, 1976. "A Stochastic Model of Applied Research," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 265-81, April.
  19. Partha Dasgupta & Joseph Stiglitz, 1980. "Industrial Structure and the Nature of Innovative Activity (Now published in Economic Journal, Vol.90 (June 1980)pp.226-293.)," STICERD - Theoretical Economics Paper Series /1980/04, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  20. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, vol. 65(6), pages 1389-1420, November.
  21. Cozzi Guido & Spinesi Luca, 2004. "Information Transmission and the Bounds to Growth," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-17, March.
  22. Saint-Paul, Gilles, 2001. "Growth Effects of Non-Proprietary Innovation," CEPR Discussion Papers 3069, C.E.P.R. Discussion Papers.
  23. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-93, June.
  24. Guido Cozzi & Ornella Tarola, 2006. "R&D Cooperation, Innovation, and Growth," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(4), pages 683-701, December.
  25. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
  26. Partha Dasgupta & Joseph Stiglitz, 1980. "Uncertainty, Industrial Structure, and the Speed of R&D," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 1-28, Spring.
  27. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
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