nep-ino New Economics Papers
on Innovation
Issue of 2009‒12‒11
eight papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. The importance of R&D subsidies and technological infrastructure for regional innovation performance - A conditional efficiency approach By Tom Broekel; Charlotte Schlump
  2. Statistical Trends in Pharmaceutical Research for Poor Countries By Jean O Lanjouw
  3. Innovation through Long-distance Conversations? Lessons from Offshoring-based Software Clusters in Bangalore By Aya Okada
  4. Chief Scientist Grants: a Waste of Public Money By Zev Golan
  5. Regulatory Protection When Firms Move First By T.Huw Edwards
  6. Diffusion Processes on Complex Networks By Natalie Svarcova; Petr Svarc
  7. Dynamics of Entry and Exit of Product Varieties – what evolution dynamics can account for the empirical regularities? By Andersson, Martin; Johansson, Börje; Månsson, Kristofer
  8. Joint Venture Breakup and the Exploration-Exploitation Trade-off By Ngo Van Long; Antoine Soubeyran; Raphael Soubeyran

  1. By: Tom Broekel; Charlotte Schlump
    Abstract: The importance of R&D subsidies for innovation activities is highlighted by numerous firm-level studies. These approaches miss however the systematic regional character of innovation activities and potential firm-spanning effects of this policy measure. The literature on regional innovation performance has widely neglected R&D subsidies so far. This paper analyzes the importance of R&D subsidies as well as the relevance of a publicly funded technological infrastructure for the innovation efficiency of German regions. Using conditional nonparametric frontier techniques we find positive effects of R&D subsidies and somewhat smaller ones for the technological infrastructure, which however vary between industries.
    Keywords: innovation policy, regional innovation efficiency, technological infrastructure, stepwise conditional efficiency analysis
    JEL: O18 O38 R58 R12
    Date: 2009–11
  2. By: Jean O Lanjouw
    Abstract: Introducing patent rights in developing country markets might stimulate greater R and D investment targeting their specific health needs – areas long neglected. This paper examines this argument using statistical data and survey evidence. We identify a set of diseases where 99 per cent of the burden is estimated to fall in lower income countries. Because science gaps and market potential will influence R and D priorities, this group is broke into a subset that already have low-cost and effect treatments, and those that to not.
    Keywords: R and D, investment, health, statistical data, survey, diseases, burden, lower income countries, science, market potential, low cost, treatments, Pharmaceutical Research, poor countries, innovative, India, R&D, developing drugs, drugs
    Date: 2009
  3. By: Aya Okada
    Abstract: This paper is aganist the popular assertion regarding the links between innovation and clustering and it is found that the main sources of knowledge transfer and innovation among key firms in Bangalore’s software cluster are their external linkages outside the cluster rather than face-to-face interactions between firms within the cluster. Moreover, the rich pool of skilled labor, made available through clustering has played an important role in facilitating learning, that is, diffusing the knowledge brought in by foreign networks.
    Keywords: innovation, clustering, transfer, Bangalore, software, cluster, linkages, labor, skilled labour, foreign, knowledge, firms, knowledge, economies of scale, economy, information, human resources, competitive environment, biotechnology, India
    Date: 2009
  4. By: Zev Golan (Jerusalem Institute for Market Studies, Israel)
    Abstract: The chief scientist program is designed to support Israeli technological projects. The level of subsidization, as revealed in JIMS' position paper, is much higher than the level used by OECD members. In fact, the Chief Scientist office distributes freely taxpayers' money without filtering and sorting the best projects. Usually, the bulk of the budget is given to large companies with extended public relations budgets. In the past 10 years, national expenditure on civilian R&D as a percent of GDP has more than doubled, from 2.2% in 1995 to 4.7% in 2008.
    Keywords: Chief Scientist, Research and Development, R&D, Taxes, Grants
    Date: 2009–07
  5. By: T.Huw Edwards (Dept of Economics, Loughborough University)
    Abstract: I investigate the imposition of a horizontal technical barrier to trade (HTBT) in a symmetric, cross-hauling duopoly. Tariffs and subsidies are ruled out, but, in the absence of a mutual recognition agreement, it is possible for governments to impose HTBTs, so long as firms apply different technologies. If firms are first movers, this possibility may induce them to avoid technical collaboration, in order to tempt governments into creating local monopolies, except where spillovers and R&D effects are high. This exacerbates the costs of regulatory protection, compared to standard models without R&D or spillovers.
    Keywords: Research and development, spillovers, trade, protection.
    JEL: F10 F19 L13 L50
    Date: 2009–11
  6. By: Natalie Svarcova (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Petr Svarc (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: In this paper we apply agent-based methodology on an issue that is fundamental for economic prosperity and growth: the diffusion of innovations. The diffusion of innovations is one of the topics where agent-based simulation is an extremely fruitful method allowing not only the observation of stable states but also the process and development of the diffusion. Furthermore, empirical studies revealed that the topological structure of interactions among individuals importantly influences the diffusion’s course and outcomes. We analyze diffusion outcomes for five different topologies, assuming markets where individuals are highly influenced by the adoption decision of their peers and innovations are introduced into the markets in two different ways: mass media campaigns and seeding procedures. Our results indicate that the topology of the relations among individuals importantly influences the speed and development of the diffusion process as well as final market penetration. Scale free topology seems to promote fast innovation diffusion, at the same time being characterized by the high uncertainty of the diffusion outcomes. Less heterogeneous networks (small worlds, two-dimensional lattice and ring) yield a much slower diffusion of the innovation, at the same time being much less unpredictable than scale free topology.
    Keywords: innovation diffusion, complex networks, scale-free networks
    JEL: O31 O33
    Date: 2009–12
  7. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Månsson, Kristofer (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Firm-level heterogeneity is substantial even in narrowly defined industries. This paper focuses on formulating evolution dynamics which can account for the observed heterogeneity and its maintenance. Based on examination of data on Swedish firm’ supply pattern to different markets over time, we present a parsimonious model that has the ambition to capture the picture of heterogeneous firms, while accommodating the simultaneous exit and entry of destination varieties in firms’ supply pattern. The model assumes both scale economies of firms and path-dependence, where the latter is manifested in such a way that the arrival rate of innovation ideas to an individual firm is a function of each firm’s stock of varieties at every given point in time. The path-dependence phenomenon is an “explosive” non-linearity, whereas conservation mechanisms include development of demand and exit of established varieties. The described path dependence explains the skewed distribution of varieties across firms, but the question of what keeps the “equilibrium” away from competitive exclusion where only few large firms remain. We make use of simulations to depict and assess the innovation dynamics of the proposed model.
    Keywords: innovation; path-dependence; firm-level; heterogeneity; evolution dynamics
    JEL: C16 F14 L25 O33
    Date: 2009–11–23
  8. By: Ngo Van Long; Antoine Soubeyran; Raphael Soubeyran
    Abstract: This paper explores the e¤ect of a potential joint-venture breakup on the level of technology transfer in a set-up with exploration-exploitation trade-offs in the presence of time compression costs. We consider a joint-venture relationship between a technologically advanced multinational firm and a local firm operating in a developing economy where the ability to enforce contracts is weak, and the local firm can quit without penalties. The multinational firm has to consider the advantages and disadvantages of an intensive transfer of technology versus an extensive one. In response to the breakup incentives, the multinational firm reduces the intensity (lowering the pace) and opts for a more extensive transfer mode (longer duration of transfer), compared to the first best. The scheme is supported by a flow of side payments to encourage the local firm to stay longer. We show that a fall in time compression costs may increase or decrease the intensity of technology transfer, both in the first-best and in the second-best scenarios, depending on the nature of the saving in time-compression costs.
    Date: 2009–11

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