ECONOMICS OF INNOVATION
The objective of this course is to provide students with greater understanding of the complex process of innovation and how this leads to economic growth. This course offers an introduction to contemporary innovation research. The emphasis is on providing an overview, which enables students to apply the different concepts and findings from the literature to better understand real life phenomena. We first explore the role of individual entrepreneurial initiative as well as deliberate firm organization in the process of introducing novelty to the market. We then turn to the problem of limited appropriability of new knowledge, which further leads us to study sectoral contingencies, or technological regimes. Finally, we discuss the major approaches and instruments of innovation policy.
Students will gain a basic knowledge of the economics of innovation, enabling them to read, interpret and critically discuss the various approaches, assumptions and findings in the contemporary literature.
Good knowledge of microeconomics and macroeconomics fundamentals.
The Nature and Importance of Innovation: What is Innovation? The Microeconomics Effects of Innovation, Interaction between Producers and Users of Innovation, Innovations and Market Failure, Restoring Incentives to Invent and Innovate, Firms Competing through Innovation.
The Nature and Role of Intellectual Property: Why are Intellectual Property Right Awarded?, Patents, Trademarks, Designs and Utility Models, Copyright, Further Questions about IPRs.
The Measurement of Innovation, Productivity and Growth: How can Innovation can be measured?, Illustrations of Innovation Statistics, Productivity at the Firm, Industry and Economy Level, Comparing Productivity and Growth across Countries.
The National Innovation System: Definition, The Central Role of R&D, The Government-University Axis, The University-Business Axis, The Government-Business Axis, National Innovation Systems in Emerging Markets.
Innovative Firms and Markets: Entrepreneurship and New Firms, Innovation and Firms, Markets and Innovation, Empirical Evidence on the Returns of Innovation, Evidence on Interactions between Competition and Innovation.
Diffusion and Social Returns: Introduction, Modelling the Rate of Adoption of a Innovation, Statistical Evidence on Rates of Adoption, Spillovers and Social Returns, Spatial Dimensions of Spillovers.
Models of Economic Growth: The Neoclassical Growth Model, Endogenous Growth Models, Evolutionary and Other Models.
Innovation and Globalization: What Is Globalization?, World Trade in Historical Perspective, Theories of Trade and Growth, International Knowledge and Technology Flows, Theory and Evidence, International Financial Flows, International Aspects of IPRs
Technology, Wages, and Jobs: Microeconomic Models of Innovation and Labor Markets, Innovation and Labor Markets, Macroeconomic and Trade Models of Innovation and Labor Markets.
Microeconomic Policies to Promote Firm-Level Innovation: Is the Intellectual Property System Working, Incentive Systems of Encouraging Firm-Level R&D, Other Innovation Policies.
Macroeconomic Issues and Policy: Macroeconomic Evidence on IPRs and Economic Growth, Trade-Related Aspects of Intellectual Property (TRIPS), Intellectual Property Rights, Exhaustion, and Parallel Imports, Piracy and Counterfeit, R&D in the Global Economy, International Migration of Skilled Labor
Mode of Delivery
The course will combine lectures and open discussion based on selected articles from the literature, indicated in the reading list. Moreover, some case studies will be presented in class.
Greenhalgh, C., and Rogers, M. (2010). Innovation, intellectual property, and economic growth. Princeton University Press. Chapters 1-2-3-4-5-7-8-9-10-11-12.
Recommended reading list
1) Dosi, G. (1988). Sources, procedures, and microeconomic effects of innovation. Journal of economic literature, 1120-1171.
2) Pavitt, K. (1984). Sectoral patterns of technical change: towards a taxonomy and a theory. Research policy, 13(6), 343-373.
3) Breschi, S., Malerba, F., and Orsenigo, L. (2000). Technological regimes and Schumpeterian patterns of innovation. The Economic Journal, 110(463), 388-410.
4) Cefis, E., and Orsenigo, L. (2001). The persistence of innovative activities: A cross-countries and cross-sectors comparative analysis. Research Policy,30(7), 1139-1158.
5) Brusoni, S., Cefis, E., and Orsenigo, L. (2006). Innovate or Die? A critical review of the literature on innovation and performance. CESPRI – Bocconi University, WP, (179).
6) Cohen, W. M., and Levinthal, D. A. (1990). Absorptive capacity: a new perspective on learning and innovation. Administrative science quarterly, 128-152.
7) Malerba, F., and Orsenigo, L. (1996). The dynamics and evolution of industries. Industrial and Corporate Change, 5(1), 51-87.
8) David, P. A. (1985). Clio and the Economics of QWERTY. The American economic review, 75(2), 332-337.
9) Arthur, W. B. (1989). Competing technologies, increasing returns, and lock-in by historical events. The economic journal, 99(394), 116-131.
10) Witt, U. (1997). “Lock-in” vs. “critical masses”—Industrial change under network externalities. International Journal of Industrial Organization, 15(6), 753-773.
11) Breschi, S., and Lissoni, F. (2001). Knowledge spillovers and local innovation systems: a critical survey. Industrial and corporate change, 10(4), 975-1005.
The material related to case studies will provided in class.
The reading material, the slides and other teaching material will be available on the web learning platform.
Written examination (open questions) + optional student presentation (max 3/30)
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