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Innovations, Patent Races, and Endogenous Growth

Listed author(s):
  • 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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File URL: http://economics.yale.edu/sites/default/files/files/Workshops-Seminars/Macroeconomics/zeira-030304.pdf
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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
Handle: RePEc:ecl:harjfk:rwp02-047
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  2. Jones, Charles I & Williams, John C, 2000. "Too Much of a Good Thing? The Economics of Investment in R&D," Journal of Economic Growth, Springer, vol. 5(1), pages 65-85, March.
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  7. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-293, June.
  8. Philippe Aghion & Mathias Dewatripont & Jeremy C. Stein, 2005. "Academic Freedom, Private-Sector Focus, and the Process of Innovation," NBER Working Papers 11542, National Bureau of Economic Research, Inc.
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  15. Charles I. Jones & John C. Williams, "undated". "Measuring the Social Return to R&D," Working Papers 97002, Stanford University, Department of Economics.
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  17. Jakob B. Madsen & EPRU & FRU, 2007. "Semi-Endogenous Versus Schumpeterian Growth Models: Testing The Knowledge Production Function Using International Data," Monash Economics Working Papers 26-07, Monash University, Department of Economics.
  18. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  19. 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.
  20. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
  21. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
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  25. Li, Chol-Won, 2001. "On the Policy Implications of Endogenous Technological Progress," Economic Journal, Royal Economic Society, vol. 111(471), pages 164-179, May.
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