nep-ino New Economics Papers
on Innovation
Issue of 2009‒01‒03
twenty-six papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Patent Thickets and the Market for Innovation: Evidence from Settlement of Patent Disputes By Alberto Galasso; Mark Schankerman
  2. Motivation and Sorting in Open Source Software Innovation By Sharon Belenzon; Mark Schankerman
  3. Innovation and Productivity in SMEs: Empirical Evidence for Italy By Bronwyn H. Hall; Francesca Lotti; Jacques Mairesse
  4. The Effects of R&D on Regional Invention and Innovation By Ejermo, Olof; Gråsjö,Urban
  5. On R&D and the undersupply of emerging versus mature technologies By Tom-Reiel Heggedal
  6. Managing Search Strategies for Open Innovation: The Role of Environmental Munificence as well as Internal and External R&D By Sofka, Wolfgang; Grimpe, Christoph
  7. Formal and Informal Technology Transfer from Academia to Industry: Complementarity Effects and Innovation Performance By Grimpe, Christoph; Hussinger, Katrin
  8. Drivers and Effects of Internationalising Innovation by SMEs By Rammer, Christian; Schmiele, Anja
  9. The Effects of Experience on Selecting Innovation Projects: Better the Devil You Know By Schmidt, Tobias; Schwiebacher, Franz; Sofka, Wolfgang
  10. Developing internationally comparable indicators for the commercialization of publicly-funded research By Arundel, Anthony; Bordoy, Catalina
  11. Poolability and Aggregation Problems of Regional Innovation Data: An Application to Nanomaterial Patenting By Roberto Patuelli; Andrea Vaona; Christoph Grimpe
  12. Extended RJV cooperation and social welfare By Gianluca Femminis; Gianmaria Martini
  13. The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence By Czarnitzki, Dirk; Etro, Federico Gabriele; Kraft, Kornelius
  14. Are Local Milieus the Key to Innovation Performance? By Binz, Hanna L.; Czarnitzki, Dirk
  15. Open Innovation in a Global Perspective: What Do Existing Data Tell Us? By Koen De Backer; Vladimir López-Bassols; Catalina Martinez
  16. The Supply Side of Innovation: H-1B Visa Reforms and US Ethnic Invention By William R. Kerr; William F. Lincoln
  17. Long live patents: the increasing life expectancy of patent applications and its determinants By Nicolas van Zeebroeck
  18. Environmental innovation and industrial dynamics: the contributions of evolutionary economics By Vanessa OLTRA (GREThA UMR CNRS 5113)
  19. An explanation for the inverted-U relationship between competition and innovation By Ferdinand Rauch
  20. A note about credit rationing on research and development By [Fiaschi], [Alessandro]
  21. The Two Faces of Open Innovation: NetworkExternalities and Learning. By Muge Ozman
  22. Brain Drain or Brain Bank? The Impact of Skilled Emigration on Poor-Country Innovation By Ajay Agrawal; Devesh Kapur; John McHale
  23. Drivers and Barriers of Innovation Dynamics in Healthcare - Towards a framework for analyzing innovation in Tuberculosis control in India By Engel, Nora
  24. Induced Innovation and Marginal Cost of New Technology By Yucan Liu; C. Richard Shumway
  25. Innovation and Optimal Punishment, with Antitrust Applications By Keith N. Hylton; Haizhen Lin
  26. Induced Innovation in U.S. Agriculture: Time-series, Direct Econometric, and Nonparametric Tests By Yucan Liu; C. Richard Shumway

  1. By: Alberto Galasso; Mark Schankerman
    Abstract: We study how fragmentation of patent rights ('patent thickets') and the formation of theCourt of Appeal for the Federal Circuit (CAFC) affected the duration of patent disputes, andthus the speed of technology diffusion through licensing. We develop a model of patentlitigation which predicts faster settlement agreements when patent rights are fragmented andwhen there is less uncertainty about court outcomes, as was associated with the 'pro-patentshift' of CAFC. The model also predicts that the impact of fragmentation on settlementduration should be smaller under CAFC. We confirm these predictions empirically using adataset that covers nearly all patent suits in U.S. federal district courts during the period1975-2000. Finally, we analyze how fragmentation affects total settlement delay, taking intoaccount both reduction in duration per dispute and the increase in the number of requiredpatent negotiations associated with patent thickets.
    Keywords: patents, anti-commons, patent thickets, litigation, settlement
    JEL: K41 L24 O31 O34
    Date: 2008–08
  2. By: Sharon Belenzon; Mark Schankerman
    Abstract: This paper studies the role of intrinsic motivation, reputation and reciprocity in driving opensource software innovation. We exploit the observed pattern of contributions - the 'revealedpreference' of developers - to infer the underlying incentives. Using detailed information oncode contributions and project membership, we classify developers into distinct groups andstudy how contributions from each developer type vary by license (contract) type and otherproject characteristics. The central empirical finding is that developers strongly sort bylicense type, project size and corporate sponsorship. This evidence confirms the importanceof heterogeneous motivations, specifically a key role for motivated agents and reputation, butless for reciprocity.
    Keywords: open source software, innovation, incentives, intrinsic motivation, motivatedagents, reputation, reciprocity
    JEL: L14 L17 L41 O31 O32
    Date: 2008–10
  3. By: Bronwyn H. Hall; Francesca Lotti; Jacques Mairesse
    Abstract: Innovation in SMEs exhibits some peculiar features that most traditional indicators of innovation activity do not capture. Therefore, in this paper, we develop a structural model of innovation which incorporates information on innovation success from firm surveys along with the usual R&D expenditures and productivity measures. We then apply the model to data on Italian SMEs from the "Survey on Manufacturing Firms" conducted by Mediocredito-Capitalia covering the period 1995-2003. The model is estimated in steps, following the logic of firms' decisions and outcomes: in the first, R&D intensity is linked to a set of firm and market characteristics. We find that international competition fosters R&D intensity, especially for high-tech firms. Firm size, R&D intensity, along with investment in equipment enhances the likelihood of having both process and product innovation. Both these kinds of innovation have a positive impact on firm's productivity, especially process innovation. Among SMEs, larger and older firms seem to be less productive.
    JEL: D24 L25 L26 O30 O32
    Date: 2008–12
  4. By: Ejermo, Olof; Gråsjö,Urban
    Abstract: This paper examines the effects of regional R&D on patenting for Sweden within an accessibility framework. We use two measures of patenting: number of patents granted per capita and a composite of quality-adjusted patents which we regard as an innovation indicator, respectively. Three conclusions emerge. First, we find that the specification where innovations per capita is used as a dependent variable performs much better than with granted patents per capita for capturing relationships with regional R&D. In fact, quantile regressions over the distribution of different patenting and innovation levels per capita show that R&D efforts within regions affect innovations per capita positively, except for the regions with the lowest levels of R&D. The effects on granted patents per capita are less robust and depend inconsistently on the level of R&D. Secondly, accessibility to inter-regional R&D do not affect innovation significantly in our results, which suggests that effects are locally bounded. This implies that studies of the R&D-innovation relationship are plagued by misspecification, since studies tend to show that R&D-effects diffuse to other regions. This is also the case in our study; the inter-regional effects are an important factor for granted patents. Third, the share of university R&D of all regional R&D has no effect on patenting, which suggests that the two types of R&D are substitutes. In view of these results the recommendation must be to use quality-adjusted patents for regional innovation studies rather than patent grants.
    Keywords: R&D, patenting, innovations, regions, spatial dependence.
    JEL: O31 O32 O33 O34 O38 N5 O47 R58
    Date: 2008
  5. By: Tom-Reiel Heggedal (Statistics Norway)
    Abstract: An important policy question is whether research and development (R&D) in new, emerging technologies should be more subsidized than R&D in other more mature technologies. In this paper I analyze if innovation externalities caused by knowledge spillovers from private firms may warrant a differentiated R&D policy. I find that R&D in emerging and mature technologies should not be subsidized equally. The reason is that R&D in the two technologies is not equally undersupplied in the market due to differences in their knowledge stocks. R&D in the mature technology should be subsidized more when the sum of the output elasticities with respect to labor and knowledge in R&D production is high, while R&D in the emerging technology should be subsidized more when the elasticities are low.
    Keywords: Endogenous growth; Innovation policy; Technological spillovers; Sector-specific R&D.
    JEL: O32 O38
    Date: 2008–12
  6. By: Sofka, Wolfgang; Grimpe, Christoph
    Abstract: Firms compete increasingly in an open innovation environment. Search strategies for external knowledge become therefore crucial for firm success. Existing research differentiates between the breadth (diversity) and depth (intensity) with which firms pursue external knowledge source. A consensus exists that resource constrains force firms to balance both dimensions. However, relatively little is known on how managers can selectively strengthen one of these dimensions. We argue conceptually that the breadth and depth of a search strategy depends upon the nature of a firm’s absorptive capacity (i.e. whether they are built through internal or external R&D activities) and the munificence of its innovation environment. We test these hypotheses empirically for a large sample of more than 8,300 firms from 12 European countries. Our empirical results show that in-house R&D strengthens the depth of a firm’s search strategy while external R&D activities (e.g. contract research) increase its breadth. Moreover, we find that scarce innovation environments favor deep search strategies while breadth is more prevalent in munificent environments. We develop targeted management recommendations based on these results.
    Keywords: Open innovation, absorptive capacity, search strategies
    JEL: L60 O32
    Date: 2008
  7. By: Grimpe, Christoph; Hussinger, Katrin
    Abstract: Literature has identified formal and informal channels in university technology transfer. While formal technology transfer typically involves a legal contract on a patent or on collaborative research activities, informal transfer channels refer to personal contacts and hence to the tacit dimension of knowledge transfer. Research is, however, scarce regarding the interaction of formal and informal transfer mechanisms. In this paper, we analyze whether these activities are mutually reinforcing, i.e. complementary. Our analysis is based on a comprehensive dataset of more than 2,000 German manufacturing firms. We perform direct and indirect tests for the complementarity of formal and informal technology transfer. Our results confirm a complementary relationship: using both transfer channels contributes to higher innovation performance. The management of the firm should therefore strive to maintain close informal relationships with universities to realize the full potential of formal technology transfer.
    Keywords: University technology transfer, complementarity, innovation performance
    JEL: L24 O31
    Date: 2008
  8. By: Rammer, Christian; Schmiele, Anja
    Abstract: This paper investigates the drivers and effects of the internationalisation of innovation activities in SMEs based on a large data set of German firms covering the period 2002-2007. We look at different stages of the innovation process (R&D, design, production and sales of new products, and implementation of new processes) and explore the role of internal resources, home market competition and innovationrelated location advantages for an SME’s decision to engage in innovation activities abroad. By linking international innovation activities to firm growth in the home market we try to identify likely internationalisation effects at the firm level. The results show that export experience and experience in knowledge protection are highly important for international innovation activities of SMEs. Fierce home market competition turns out to be rather an obstacle than a driver. High innovation costs stimulate internationalisation of non-R&D innovation activities, and shortage of qualified labour expels production of new products. R&D activities abroad and exports of new products spur firm growth in the home market while there are no negative effects on home market growth from shifting production of new products abroad.
    Keywords: Internationalisation of Innovation, Globalisation, SMEs, Effects of Innovation, Absorptive Capacities, Market Structure
    JEL: F23 L22 L25 O31 O32 O47
    Date: 2008
  9. By: Schmidt, Tobias; Schwiebacher, Franz; Sofka, Wolfgang
    Abstract: Innovation success depends heavily on firm’s ability to set priorities and select the most promising options from its project portfolio before the odds of success or failure become visible and reliable. We ask: What does previous innovation experience tell firms about what not to do in the future? With this in mind, we focus on projects that did not materialise or were abandoned - an important building block for choosing and implementing the “right” projects. We suggest two major learning mechanisms. On the one hand, real options theory suggests a process based on financial data. On the other hand, research on absorptive capacities finds that previous innovation experience translates into superior ability to value, extract and exploit external knowledge. We test both hypotheses on an empirical basis for more than 600 German firms, covering innovation activities in the period 1997 to 2005. Our results indicate congruence between firms’ innovation experience and their project selection patterns. Extensive R&D experience materialises as a stock of knowledge that enables firms to judge projects based on knowledge criteria. Non-R&D innovation experience, stemming from producing and introducing products to markets, resonates as decision-making based on economic factors in the future. Both types of innovation experience appear to generate distinct decision-making capabilities inside the firm which are subsequently exploited in selecting projects for the future.
    Keywords: Project selection, real options, absorptive capacity
    JEL: D83 F23 O31 O32
    Date: 2008
  10. By: Arundel, Anthony (UNU-MERIT); Bordoy, Catalina (UNU-MERIT)
    Abstract: It is a common perception that European public-funded research fails to commercialize their discoveries, in contrast to the perceived success of their American counterparts. This resulted in policies aimed at improving the commercialization of European publicly-funded research, including the establishment of Technology Transfer Offices (TTOs). Recent surveys on the activities of these TTOs show that although European public-funded research lags behind the United States in patent applications and grants, they produce more start-ups, and have comparable results for the number of licenses executed. Steps to improve the international comparability of TTO surveys could provide useful new indicators for policy development. However, this will also require indicators for knowledge transfer through informal 'open science' methods.
    Keywords: Public R&D, Commericalization, Research Indicators, Open Science, Europe
    JEL: O31 O32 O38
    Date: 2008
  11. By: Roberto Patuelli (Institute for Economic Research (IRE), University of Lugano, Switzerland; The Rimini Centre for Economic Analysis, Italy); Andrea Vaona (Institute for Economic Research (IRE), University of Lugano, Switzerland; Kiel Institute for the World Economy, Germany); Christoph Grimpe (ZEW Centre for European Economic Research, Mannheim, Germany; Catholic University of Leuven, Belgium; University of Zurich, Switzerland)
    Abstract: Research and development (R&D) in the field of nanomaterials is expected to be a major driver of innovation and economic growth. In this respect, many countries, as national systems of innovation, have established support programs offering subsidies for industry- and government-funded R&D. Consequently, it is of great interest to understand which factors facilitate the creation of new technological knowledge. The existing literature has typically addressed this question by employing a knowledge production function based on firm-, regional- or even country-level data. Estimating the effects for the entire national system of innovation, however, implicitly assumes poolability of regional data. We apply our reasoning to Germany, which has well-known – and wide – regional disparities, for example between the former East and West. Based on analyses at the level of NUTS-3 regions, we find different knowledge production functions for the East and the West. Moreover, we investigate how our results are affected by the adoption of alternative aggregation levels. Our findings have implications for further research in the field, that is, a careful evaluation of poolability and aggregation is required before estimating knowledge production functions at the regional level. Policy considerations are offered as well.
    Keywords: nanotechnology, patents, poolability, aggregation, Germany, spatial autocorrelation, spatial filtering
    JEL: L60 O32 R11 R12
    Date: 2008–12
  12. By: Gianluca Femminis (DISCE, Università Cattolica di Milano); Gianmaria Martini (Università di Bergamo)
    Abstract: A wider RJV extension hastens process innovations at the cost of increasing collusion in the final market. In a Cournot model, an extended RJV is welfare enhancing only when the Antitrust Authority is strong, so that the increase in distortion is limited, and when the size of the technical improvement is large, so that the introduction of the innovation is more valuable.
    Keywords: RJV, R&D, collusion
    JEL: L13 L41 O33
    Date: 2008–12
  13. By: Czarnitzki, Dirk; Etro, Federico Gabriele; Kraft, Kornelius
    Abstract: We develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions with a Tobit model based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). We confirm the empirical validity of our predictions and perform a number of robustness test with instrumental variables.
    Keywords: R&D, Entry, Endogenous market structures, Leadership
    JEL: O31 O32
    Date: 2008
  14. By: Binz, Hanna L.; Czarnitzki, Dirk
    Abstract: This study investigates how local milieus foster innovation success in firms. We complement the common practice of linking firm performance indicators to regional characteristics with survey evidence on the perceived importance of locational factors. While the former approach assumes that location characteristics affect all firms in the same way, the survey allows us to model how firms judge the attractiveness of locations using a heterogeneous set of criteria. It turns out that the availability of highly skilled labor and the proximity to suppliers matter for firms’ innovation performance. Interestingly, location factors obtained from the survey provide a more accurate explanation of how local milieus facilitate innovation.
    Keywords: Innovation performance, R&D, location factors, Flanders
    JEL: O31 O38
    Date: 2008
  15. By: Koen De Backer; Vladimir López-Bassols; Catalina Martinez
    Abstract: Open innovation has received a lot of attention in the business management literature and recently also in policy discussions. Until now, most of the empirical evidence has been based on case study work offering detailed insights into some best practices of open innovation in companies’ innovation strategies. While existing large-scale data may offer interesting empirical evidence on open innovation, they have surprisingly not really been analysed in great detail. Especially the increasing importance of open innovation on a global scale in so-called global innovation networks, calls for internationally comparable data on open innovation. This paper presents different indicators using existing data on R&D investments, innovation survey data, patent data and data on licensing, illustrating the increasing importance and the different characteristics of open innovation across companies, industries and countries. <P>L'Innovation ouverte dans une perspective mondiale? : Que nous disent les données disponibles? <BR>L'innovation ouverte a suscité une grande attention dans les travaux publiés sur la gestion d'entreprise,ainsi que dans le cadre des débats récents sur l'action publique. Pour l'heure, la plupart des données empiriques sur le sujet reposent sur des études de cas, offrant des indications précises sur certaines des meilleures pratiques observées en matière d'innovation ouverte dans le cadre des stratégies d'innovation des entreprises. Alors que de vastes ensembles de données pourraient offrir des éléments empiriques intéressants sur l'innovation ouverte, ils n'ont étonnamment pas vraiment été analysés de manière très poussée. Or, compte tenu de l'importance croissante que revêt en particulier l'innovation ouverte à l'échelle mondiale dans le cadre des « réseaux mondiaux d'innovation », il est nécessaire que l'on puisse disposer de données comparables au niveau international sur l'innovation ouverte. Nous présentons dans ce document différents indicateurs fondés sur des données disponibles relatives aux investissements en recherche-développement (R-D), tirées d'enquêtes sur l'innovation, relatives aux brevets et portant sur les concessions de licences, qui illustrent l'importance grandissante et les caractéristiques diverses de l'innovation ouverte dans une multitude d'entreprises, de secteurs d'activité et de pays.
    Date: 2008–12–16
  16. By: William R. Kerr (Harvard Business School, Entrepreneurial Management Unit); William F. Lincoln (University of Michigan, Ann Arbor, MI)
    Abstract: This study evaluates the impact of high-skilled immigrants on US technology formation. Specifically, we use reduced-form specifications that exploit large changes in the H-1B visa program. Fluctuations in H-1B admissions levels significantly influence the rate of Indian and Chinese patenting in cities and firms dependent upon the program relative to their peers. Most specifications find weak crowding-in effects or no effect at all for native patenting. Total invention increases with higher admission levels primarily through the direct contributions of ethnic inventors.
    Keywords: Innovation, Research and Development, Patents, Scientists, Engineers, Inventors, H-1B, Immigration, Ethnicity, India, China, Endogenous Growth.
    JEL: F15 F22 J44 J61 O31
    Date: 2008–12
  17. By: Nicolas van Zeebroeck (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.)
    Abstract: Relying on a comprehensive dataset including detailed information on all patent applications filed to the EPO from 1980 to 2000 and on the renewal of those of them that were granted, this paper presents the first survival time analysis of the determinants of patent length. The results are threefold: first, they clearly establish that the life expectancy of patent rights has significantly increased over the past decades despite a small decline in the average grant rate. Second, they show that some filing strategies strongly influence the length of patents, possibly due to induced delays in the examination process. And third, they confirm that more valuable patents (more cited or covering a larger geographical scope) tend to live longer.
    Keywords: Patent length, Patent value, Renewals, Granting Process, Survival Time Analysis
    JEL: O31 O34 O50
    Date: 2008–12
  18. By: Vanessa OLTRA (GREThA UMR CNRS 5113)
    Abstract: The purpose of this article is to discuss the contributions of the evolutionary theory of innovation on the micro and meso dynamics of environmental innovations. We argue that the evolutionary literature on innovation, and more particularly on technological regimes, provides a relevant framework in order to analyse the various determinants of environmental innovations and the double externality problem in an industrial dynamics context. The article starts with an overview of the empirical literature on environmental innovations with a focus on their determinants and specificities. In section 3, we discuss the contributions of the evolutionary literature on technological regimes and argue that it can provide a relevant framework for a sectoral approach of environmental innovations. In section 4, we concentrate on the role of demand side dynamics and highlight the implications of technological competition models on the role of demand conditions in the diffusion of environmental technologies. Finally, section 5 is devoted to the implications of the evolutionary theory of innovation on the question of the transition towards more sustainable technological systems.
    Keywords: Environmental innovations, industrial dynamics, evolutionary theory, technological regimes
    JEL: Q55 O31
    Date: 2008
  19. By: Ferdinand Rauch
    Abstract: The Dixit-Stiglitz model is extended by the possibility for rms to un- dertake process innovation. The model can provide a new explanation to describe the relationship that research activity of rms is positively corre- lated with product market competition at low levels of competition, and negatively at high levels that has been found in the data. The initial pos- itive relationship is caused by an increased business stealing opportunity with more competition, while the negative eect comes from the reduc- tion of the markup due to higher competition (measured as elasticity of substitution). Also the ambiguous relationship of market entry barriers with respect to research activity is discussed using a less general form of the model. This framework may also be used to explain the inverted-U relationship found between competition and advertising expenditures.
    JEL: L10 O3
    Date: 2008–12
  20. By: [Fiaschi], [Alessandro]
    Abstract: This note develops an overlapping generations model with credit rationing on research and development, in which both are determined simultaneously and endogenously. The model provides a useful tool to examine different policies that may help alleviate the negative effect of …financial constraints faced by fi…rms.
    Keywords: R&D; credit constraints; overlapping generations
    JEL: D91 D82 D92
    Date: 2008–09
  21. By: Muge Ozman
    Abstract: In this paper I differentiate between two types of benefits of open innova- tion. Network externalities e¤ect happens when open innovation increases the participation of one group of users which increases the value of adoption for another group of users. Learning e¤ect happens when economic actors increase their knowledge through access to external sources of knowledge. I investigate how each effect can be dominant depending on nature of products, by drawing upon previous research in product modularity. In addition I discuss the fac- tors which will strengthen or weaken the e¤ects of each dimension. The main variables which influence learning are, tacitness of knowledge, technological op- portunities, appropriability of knowledge and turbulence. Network externalities e¤ect can be strengthened by increased user innovation.
    Date: 2008
  22. By: Ajay Agrawal; Devesh Kapur; John McHale
    Abstract: The development prospects of a poor country depend in part on its capacity for innovation. The productivity of its innovators depends in turn on their access to technological knowledge. The emigration of highly skilled individuals weakens local knowledge networks (brain drain), but may also help remaining innovators access valuable knowledge accumulated abroad (brain bank). We develop a model in which the size of the optimal innovator diaspora depends on the competing strengths of co-location and diaspora effects for accessing knowledge. Then, using patent citation data associated with inventions from India, we estimate the key co-location and diaspora parameters; the net effect of innovator emigration is to harm domestic knowledge access, on average. However, knowledge access conferred by the diaspora is particularly valuable in the production of India's most important inventions as measured by citations received. Thus, our findings imply that the optimal emigration level may depend, at least partly, on the relative value resulting from the most cited compared to average inventions.
    JEL: O3 O33
    Date: 2008–12
  23. By: Engel, Nora (UNU-MERIT)
    Abstract: Tuberculosis remains the biggest infectious killer in India and worldwide, and it has recently regained substantial international attention with its come-back in drug resistant forms. The environment, the disease and the societal response to it are changing and with it challenges and opportunities to control the disease. Innovation in a variety of areas such as improved diagnostic tests, drugs, delivery mechanisms, service processes, institutions and treatment regimes is needed in order to be able to respond to the changing public health challenge. This paper reviews theoretical approaches to innovation of direct relevance to the case and examines what theoretical framework is useful to look at the problem of innovation in public health in India. Such an analysis can reveal drivers and barriers of change within the context of the Indian health system in a comprehensive, problem-oriented way and is thus able to add to existing research done on TB. However, given that TB control is a public health challenge, concerned with problems of delivery and implementation, the concept of innovation has to go beyond technological innovation and the private sector. Therefore it is argued that the case can simultaneously contribute to innovation theory in order to better understand what change processes and innovation for concrete public health challenges in a country such as India mean. After a short description of recent changes in TB control based on fieldwork in India the paper proceeds with an examination of existing frameworks on healthcare innovation upon their usefulness for such a case. The paper concludes with a proposal for a theoretical framework and areas for further empirical fieldwork.
    Keywords: Innovation, Healthcare, Tuberculosis, Disease control, India
    JEL: I18 O31 O38
    Date: 2008
  24. By: Yucan Liu; C. Richard Shumway (School of Economic Sciences, Washington State University)
    Abstract: The hypothesis of induced innovation has been empirically tested in many ways, using a wide variety of data and test periods for many industries in many countries. However, each test has maintained the hypothesis that the relative marginal cost of developing and implementing technologies that save one input is the same as for any other input. Lacking data on development and implementation costs of input-saving technologies, we develop and use a nonparametric procedure to estimate relative differences required for technical change in U.S. agriculture to be consistent with the induced innovation hypothesis.
    Keywords: induced innovation, marginal cost, nonparametric
    JEL: O30 D24
    Date: 2008–06
  25. By: Keith N. Hylton (Boston University Law School); Haizhen Lin (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: This paper modifies the optimal penalty analysis by incorporating investment incentives with external benefits. In the models examined, the recommendation that the optimal penalty should internalize the marginal social harm is no longer valid as a general rule. We focus on antitrust applications. In light of the benefits from innovation, the optimal policy will punish monopolizing firms more leniently than suggested in the standard static model. It may be optimal not to punish the monopolizing firm at all, or to reward the firm rather than punish it. We examine the precise balance between penalty and reward in the optimal punishment scheme.
    Keywords: optimal law enforcement, optimal antitrust penalty, monopolization, innovation, internalization, strict liability, static penalty
    JEL: D42 K14 K21 K42 L41 L43
    Date: 2008–11
  26. By: Yucan Liu; C. Richard Shumway (School of Economic Sciences, Washington State University)
    Abstract: The hypothesis of induced innovation is tested for U.S. agriculture using a high-quality state-level panel data set and three disparate testing techniques – time series, direct econometric, and nonparametric. We find little support for the hypothesis. That conclusion is robust across testing techniques. However, as with all empirical tests of this hypothesis conducted to date, ours focus only on the demand side of the hypothesis. The hypothesis could have been rejected simply because the marginal cost of developing and implementing input-saving technologies for the relatively expensive inputs is greater than for the relatively cheap inputs.
    Keywords: econometric, induced innovation, nonparametric, time series, 2-stage CES
    Date: 2008–05

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