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Global Innovation Contests

Author

Listed:
  • Elias Dinopoulos

    (Department of Economics University of Florida)

  • Constantinos Syropoulos

    (School of Economics Drexel University)

  • Theofanis Tsoulouhas

    (Department of Economics and Business Management University of California, Merced)

Abstract

This paper develops a two-country, dynamic, general-equilibrium model with innovation contests to study the impact of globalization on the skill premium and fully endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D to discover new products while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country’s relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country’s long-run growth.

Suggested Citation

  • Elias Dinopoulos & Constantinos Syropoulos & Theofanis Tsoulouhas, 2023. "Global Innovation Contests," School of Economics Working Paper Series 2023-3, LeBow College of Business, Drexel University.
    • Handle: RePEc:ris:drxlwp:2023_003
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    Cited by:

    1. Dinopoulos, Elias & Grieben, Wolf-Heimo & Şener, Fuat, 2023. "A Policy Conundrum: Schumpeterian Growth or Job Creation?," Economic Modelling, Elsevier, vol. 126(C).
    2. Theofanis Tsoulouhas, 2023. "Advances in the Theory and Applications of Contests and Tournaments: Introduction to the Special Issue," Games, MDPI, vol. 14(2), pages 1-3, March.

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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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