nep-ino New Economics Papers
on Innovation
Issue of 2010‒05‒22
thirteen papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Leadership Cycles By Vincenzo Denicolò; Piercarlo Zanchettin
  2. Parallel Imports and Innovation in an Emerging Economy By Andrea Mantovani; Alireza Naghavi
  3. What Should We Expect from Innovation? A Model-Based Assessment of the Environmental and Mitigation Cost Implications of Climate-Related R&D By Valentina Bosetti; Carlo Carraro; Romain Duval; Massimo Tavoni
  4. Complexity and the Coordination of technological Knowledge: the Case of innovation Platforms By Consoli Davide; Patrucco Pier Paolo
  5. Intellectual Property Rights Adoption in Developing Countries By Auriol, Emmanuelle; Biancini, Sara
  6. Contracting and Ideas Disclosure in the Innovation Process By Martimort, David; Poudou, Jean-Christophe; Sand-Zantman, Wilfried
  7. Open Innovation and Systemic Reconfiguration in the Car Industry: the Case of Electric Vehicles By Enrietti Aldo; Patrucco Pier Paolo
  8. Innovation Behaviour At Farm Level â Selection And Identification By Sauer, Johannes; Zilberman, David
  9. Contracting for an Innovation under Bilateral Asymmetric Information By Martimort, David; Poudou, Jean-Christophe; Sand-Zantman, Wilfried
  10. Retail Price Regulation and Innovation: Reference Pricing in the Pharmaceutical Industry By Bardey, David; Bommier, Antoine; Jullien, Bruno
  11. Is 'Open Innovation' Re-Inventing Innovation Policy for Catching-up Economies? By Rainer Kattel; Erkki Karo
  12. The Regional Dimension of Sectoral Innovativeness An Empirical Investigation of Two Specialised Supplier and Two Science-Based Industries By Uwe Cantner; Matthias Bürger
  13. The Circulation of Ideas in Firms and Markets By Thomas Hellman; Enrico Perotti

  1. By: Vincenzo Denicolò (University of Bologna); Piercarlo Zanchettin (University of Leicester)
    Abstract: We study a quality-ladder model of endogenous growth that produces stochastic leadership cycles. Over a cycle, industry leaders can innovate several successive times in the same industry, gradually increasing the magnitude of their technological lead before being replaced by a new entrant. Initially, new leaders are eager to enlarge their lead and do much of the research, but if they innovate repeatedly, their propensity to invest in R&D decreases. Eventually they stop doing research altogether, and as they are overtaken a new cycle starts. The model generates a skewed firm size distribution and a deviation from Gibrat’s law that accord with the empirical evidence. We also consider various policy measures, showing that in some cases policy should favour R&D by incumbents, not outsiders, and that stronger patent protection may reduce innovation and growth.
    Keywords: Technological Lead, Innovation, R&D
    JEL: O32 O4
    Date: 2010–04
  2. By: Andrea Mantovani (University of Bologna); Alireza Naghavi (niversity of Bologna and Fondazione Eni Enrico Mattei)
    Abstract: This paper studies the consequences of parallel import (PI) on process innovation of firms heterogeneous in their production technology. In an international setting where foreign markets differ with respect to their intellectual property rights regime, a move by a technologically inferior firm to exploit a new unregulated market can result in imitation and PI. The impact of PI on innovation is determined by the degree of heterogeneity between firms and trade costs. Increasing trade costs shifts from the market share losses brought by PI from the more to the less productive firm. This induces the former to invest more in R&D. At this point, sales in the foreign market become a determinant of the R&D decision by the technologically inferior firm. For low levels of firm heterogeneity, PI increases output by this firm targeted for the unregulated market, hence increases its innovation efforts. A tariff policy accompanied by opening borders to PI only increases welfare when the technological gap between the two firms is sufficiently large.
    Keywords: Intellectual Property Rights, Parallel Imports, Innovation, Trade Costs, Welfare
    JEL: F12 F13 L11
    Date: 2010–04
  3. By: Valentina Bosetti (Fondazione Eni Enrico Mattei and CMCC); Carlo Carraro (Fondazione Eni Enrico Mattei, University of Venice, CEPR, CESifo and CMCC); Romain Duval (OECD); Massimo Tavoni (Fondazione Eni Enrico Mattei, Princeton Environmental Institute and CMCC)
    Abstract: This paper addresses two basic issues related to technological innovation and climate stabilisation objectives: i) Can innovation policies be effective in stabilising greenhouse gas concentrations? ii) To what extent can innovation policies complement carbon pricing (taxes or permit trading) and improve the economic efficiency of a mitigation policy package? To answer these questions, we use an integrated assessment model with multiple externalities and an endogenous representation of technical progress in the energy sector. We evaluate a range of innovation policies, both as a stand-alone instrument and in combination with other mitigation policies. Even under fairly optimistic assumptions about the funding available for, and the returns to R&D, our analysis indicates that innovation policies alone are unlikely to stabilise global concentration and temperature. The efficiency gains of combining innovation and carbon pricing policies are found to reach about 10% for a stabilisation target of 535 ppm CO2eq. However, such gains are reduced when more plausible (sub-optimal) global innovation policy arrangements are considered.
    Keywords: Climate Change, Environmental Policy, Energy R&D Fund, Stabilisation Costs
    JEL: H0 H2 H3 H4 O3 Q32 Q43 Q54
    Date: 2010–04
  4. By: Consoli Davide; Patrucco Pier Paolo (University of Turin)
    Date: 2010–05
  5. By: Auriol, Emmanuelle; Biancini, Sara
    Abstract: This paper studies the incentives that developing countries have to enforce intellectual properties rights (IPR). On the one hand, free-riding on rich countries technology reduces the investment cost in R&D. On the other hand, it yields apotential indirect cost: a firm that violates IPR cannot legally export in a country that enforces them. IPR act like a barrier to entry of the advanced economy markets. Moreover free-riders cannot prevent other to copy their own innovation. The analysis, which distinguishes between large and small developing countries, predicts that small ones should be willing to respect IPR if they want to export and access advanced economies markets, while large emerging countries, such as China and India, will be more reluctant to do so as their huge domestic markets develop. Global welfare is higher under the full protection regime if the developing country does not innovate. It is higher under a partial regime if both countries have access to similar R&D technology and the developing country market is large enough.
    JEL: F12 F13 F15 L13 O31 O34
    Date: 2009–10
  6. By: Martimort, David; Poudou, Jean-Christophe; Sand-Zantman, Wilfried
    Abstract: We analyze the contract between an innovator and a developer, when the former has private information on his idea and the latter must exert efforts but may also quit the relationship after having been informed. We show that the equilibrium contracts distort downwards the developer's incentives but in different ways according to the strength of intellectual property rights (IPR). For example, with intermediate IPR, only pooling contracts arise with a limited amount of information revealed.
    Date: 2009–06
  7. By: Enrietti Aldo (University of Turin); Patrucco Pier Paolo (University of Turin)
    Date: 2010–05
  8. By: Sauer, Johannes; Zilberman, David
    Abstract: Using a squential logit model and a mixed-effects logistic regression approach this empirical study investigates factors for the adoption of automatic milking technology (AMS) at the farm level accounting for problems of sequential sample selection and behaviour identification. The results suggest the importance of the farmerâs risk perception, significant effects of peer-group behaviour, and a positive impact of previous innovation experiences.
    Keywords: Technology Adoption, Mixed-Effects Regression, Risk, Agricultural and Food Policy, Farm Management, Land Economics/Use,
    Date: 2010–04
  9. By: Martimort, David; Poudou, Jean-Christophe; Sand-Zantman, Wilfried
    Date: 2009–07
  10. By: Bardey, David; Bommier, Antoine; Jullien, Bruno
    JEL: I18 L11 L15 L51
    Date: 2009–07
  11. By: Rainer Kattel; Erkki Karo
    Abstract: This paper discusses the current state of the .open innovationÿ thinking in the context of core economic challenges faced by catching-up and developing countries. The main argument of the paper is that due to the paradoxes and contradictions between the .mainstreamÿ innovation discourse and practice and the peculiar challenges of the catching-up countries, applying the concept of .open innovationÿ may have unintended or reverse effects on catching-up development. This problem can be remedied by more conscious attention to the basic contradictions and paradoxes that requires a more comprehensive analytical focus on innovation and technological development at the levels of firm, industry and policy.
    Date: 2010–04
  12. By: Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Matthias Bürger (Department of Economics and Business Administration, Friedrich-Schiller-University Jena and Graduate College "The Economics of Innovative Change" (DFG-GK-1411))
    Abstract: The aim of this paper is to test how geographical and technological proximity relate to a particular industry's innovative output. Two mechanisms are therefore tested, i.e. agglomeration economies and the regional exploitation of technological proximity. A new dataset is applied, which includes German patent applications from within the period 1995 to 2006. Four industries are considered, two of which are science-based, whereas the remaining two are specialised supplier industries. While diversity is associated with high innovative output in the specialised supplier industries, the results for specialisation are mixed. However, all industries seem to benefit, at least to a certain degree, from the regional re-combination of their own technologies with those of specific key industries.
    Keywords: Innovation, Proximity, Diversity
    JEL: O18 R11
    Date: 2010–05–12
  13. By: Thomas Hellman (University of British Columbia); Enrico Perotti (University of Amsterdam)
    Abstract: Novel early stage ideas face uncertainty on the expertise needed to elaborate them, which creates a need to circulate them widely to find a match. Yet as information is not excludable, shared ideas may be stolen, reducing incentives to innovate. Still, in idea-rich environments inventors may share them without contractual protection. Idea density is enhanced by firms ensuring rewards to inventors, while their legal boundaries limit idea leakage. As firms limit idea circulation, the innovative environment involves a symbiotic interaction: firms incubate ideas and allow employees to leave if they cannot find an internal fit; markets allow for wide circulation of ideas until matched and completed; under certain circumstances ideas may be even developed in both firms and markets.
    Keywords: Ideas, Innovation, Entrepreneurship, Firm Organization, Start-Ups
    JEL: D83 L22 M13 O31
    Date: 2010–05

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