nep-ino New Economics Papers
on Innovation
Issue of 2010‒07‒03
thirteen papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. R&D alliances, knowledge flows, and innovation: three studies on the value of collaborative R&D. By Frankort, Johannes Theresia Wilhelmus
  2. Innovation, Competition and Incentives for R&D By Martin Woerter; Christian Rammer; Spyros Arvanitis
  3. Innovation in Linked and Non-linked Firms: Effects of Variety of Linkages in East Asia By Tomohiro MACHIKITA; Yasushi UEKI
  4. Analysis of Internet Patenting Strategies of E-commerce Firms By Biju Paul Abraham
  5. The role of learning in innovation: in-house versus externally contracted R&D experience By Pilar Beneito López; Amparo Sanchis Llopis; María Engracia Rochina Barrachina
  6. The Impacts of Face-to-face and Frequent Interactions on Innovation: Upstream-Downstream Relations By Tomohiro MACHIKITA; Yasushi UEKI
  7. Flexible labor and innovation performance: Evidence from longitudinal firm-level data By dekker, R; Kleinknecht, A.H.; Zhou, H
  8. Quantifying Optimal Growth Policy By Grossmann, Volker; Steger, Thomas M.; Trimborn, Timo
  9. Why Imposing New Tolls on Third-Party Content and Applications Threatens Innovation and Will Not Improve Broadband Providers’ Investment By Nicholas Economides
  10. Intellectual Property Rights: Who Needs Them? By Garima Gupta; Avih Rastogi
  11. The Impact of Public and Private R&D on Farmers' Production Decisions: Econometric Evidence for Midwestern States, 1960-2004 By Huffman, Wallace E.; Fan, Xing; Schuring, Jessica
  12. What is the growth potential of green innovation? An assessment of EU climate policy options By Andrea Conte; Ariane Labat; Janos Varga; Žiga Žarnić
  13. Setting Incentives for Collaboration Among Agricultural Scientists: Application of Principal-Agent Theory to Team Work By Wallace E. Huffman

  1. By: Frankort, Johannes Theresia Wilhelmus (Maastricht University)
    Date: 2010
  2. By: Martin Woerter (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Christian Rammer (Centre for European Economic Research (ZEW), Department of Industrial Economics and International Management, Mannheim); Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper analyses the relationship between past innovation output, competition, and future innovation input in a dynamic econometric setting. We distinguish two dimensions of competition that correspond to the concepts of product substitutability and entry barriers due to fixed costs. Based on firm-level panel data for Germany and Switzerland we obtain consistent results for both countries. Innovation output in t-1 as measured by the sales share of innovative products is positively related to the degree of product obsolescence in t, and negatively to the degree of substitutability in t in both countries. Further, we find that rapid product obsolescence provides positive incentives for higher – primarily product-oriented – R&D investments in t+1, while high substitutability exerts negative incentives for future R&D investment.
    Keywords: Innovation, R&D, Competition
    JEL: O3
    Date: 2010–06
  3. By: Tomohiro MACHIKITA (Inter-disciplinary Studies Center, Japan External Trade Organization); Yasushi UEKI (Bangkok Research Centre- Japan External Trade Organization, Thailand)
    Abstract: This paper proposes a new mechanism linking innovation and networks in developing economies to detect explicit production and information linkages. It investigates the testable implications of these linkages using survey data gathered from manufacturing firms in Indonesia, Thailand, the Philippines, and Vietnam. In-house R&D activities, internal resources, and linkages with local and foreign firms play a role in reducing the costs of product-and process innovation, and the search costs of finding new suppliers and customers. We found that firms with more variety of information linkages achieve more types of innovation. Complementarities between internal and external sources of knowledge are also found.
    Date: 2010–02–01
  4. By: Biju Paul Abraham
    Abstract: Patents and patent applications are important indicators of innovative activity in industrial R & D, especially in areas such as Information Technology (IT), where technology growth is rapid. Within the IT sector this is especially true of patents for Internet-related technologies where patenting is often the only way by which entry-barriers can be erected against competitors. This paper presents the analysis of Internet-related patent applications that have been filed under the Paris Cooperation Treaty (PCT) of the World Intellectual Property Organization (WIPO) by fourteen major international firms.[Working Paper No. 532]
    Keywords: Patents, Information Technology, Internet-related technologies, Paris Cooperation Treaty (PCT), World Intellectual Property Organization (WIPO), international firms
    Date: 2010
  5. By: Pilar Beneito López (Universitat de València); Amparo Sanchis Llopis (Universitat de València); María Engracia Rochina Barrachina (Universitat de València)
    Abstract: En este trabajo se analiza el papel del aprendizaje en el éxito innovador de las empresas, tomando en consideración la naturaleza heterogénea de las actividades innovadoras, y en particular, distinguiendo entre el aprendizaje que proviene de la realización interna de actividades de I+D y el aprendizaje que proviene de la contratación externa de estas actividades. Para este trabajo se utiliza una muestra representativa de empresas manufactureras en España durante el período 1990-2006, y dentro del marco de una función de producción de innovaciones, se estiman modelos ¿count¿ con el fin de investigar la influencia que tiene en la obtención de resultados innovadores la experiencia que proviene de la I+D realizada dentro de la empresa y de la contratada externamente. Nuestros resultados muestran que el aprendizaje tiene un papel importante en la obtención de innovaciones de producto cuando las empresas organizan sus actividades de I+D internamente, y que la experiencia que proviene de la contratación externa de actividades de I+D no influye sobre el número de innovaciones de producto. This paper analyses the role of learning in firms¿ innovation success, taking into account the heterogeneous nature of innovation activities, and in particular, distinguishing between learning arising from the internal organization of R&D activities and learning from externally contracting these activities. We use a representative sample of Spanish manufacturing firms for the period 1990-2006, and within an innovation production function approach, we estimate count data models to investigate the influence of firms¿ in-house and externally contracted R&D experience in the achievement of innovative results. Our results show that learning is important in the achievement of product innovations when the firms organize R&D activities internally, and that experience from externally contracted R&D activities does not influence the number of product innovations.
    Keywords: innovation, accumulation of knowledge, in-house R&D experience, externally contracted R&D experience, count data models. innovación, acumulación de conocimiento, experiencia en I+D interna, experiencia en I+D contratada externamente, modelos para datos ¿count¿.
    JEL: O30 O34 C23 C10
    Date: 2009–10
  6. By: Tomohiro MACHIKITA (Inter-disciplinary Studies Center, Japan External Trade Organization); Yasushi UEKI (Bangkok Research Centre- Japan External Trade Organization, Thailand)
    Abstract: This paper proposes a new mechanism linking innovation and networks in developing economies to identify explicit production and information linkages and investigates the testable hypotheses of these linkages using survey data gathered from manufacturing firms in East Asia: Indonesia, Thailand, the Philippines, and Vietnam. We found that firms that dispatched engineers to customers achieved more innovations than firms that did not. Just-in-time relationship is effective for dealing with process innovation. We found that such strong complementarities are not effective for product innovation. These findings support the hypothesis that face-to-face communication and strong complementarities among buyer-seller networks have different roles in product and process innovation.
    Date: 2010–02–10
  7. By: dekker, R (TU Delft, Technology, Policy and Management, Innovation Systems; Tilburg University, ReflecT); Kleinknecht, A.H. (TU Delft, Technology, Policy and Management, Innovation Systems); Zhou, H (Erasmus University Rotterdam, Erasmus School of Economics, CASBEC Classification_JEL: J5; M5; O15; O31)
    Abstract: Firms with high shares of workers on fixed-term contracts have significantly higher sales of imitative new products but perform significantly worse on sales of innovative new products (“first on the market”). High functional flexibility in “insider-outsider” labor markets enhances a firm’s new product sales, as do training efforts and highly educated personnel. We find weak evidence that larger and older firms have higher new product sales than do younger and smaller firms. Our findings should be food for thought to economists making unqualified pleas for the deregulation of labor markets.
    Keywords: Innovation performance; new product sales; numerical flexibility; functional flexibility; SMEs; OSA longitudinal data
    Date: 2010–04–12
  8. By: Grossmann, Volker (University of Fribourg); Steger, Thomas M. (University of Leipzig); Trimborn, Timo (University of Hannover)
    Abstract: The optimal mix of growth policies is derived within a comprehensive endogenous growth model. The analysis captures important elements of the tax-transfer system and takes into account transitional dynamics. Currently, for calculating corporate taxable income US firms are allowed to deduct approximately all of their capital and R&D costs from sales revenue. Our analysis suggests that this policy leads to severe underinvestment in both R&D and physical capital. We find that firms should be allowed to deduct between 2-2.5 times their R&D costs and about 1.5-1.7 times their capital costs. Implementing the optimal policy mix is likely to entail huge welfare gains.
    Keywords: economic growth, endogenous technical change, optimal growth policy, tax-transfer system, transitional dynamics
    JEL: H20 O30 O40
    Date: 2010–06
  9. By: Nicholas Economides (Stern School of Business, NYU)
    Abstract: While some broadband providers have called Internet content and application providers free riders on their infrastructure, this is incorrect and misguided. End-users pay for their residential broadband providers for access to the Internet, and content providers pay their own ISPs for connectivity as well. However, content providers need not pay residential broadband providers’ ISPs in order to reach their customers. This feature of the Internet has been one key factor that has allowed innovation to prosper and kept barriers to entry low, as the network transport market for content and application providers functions relatively efficiently. In this paper, I consider the impact of a departure from this current system. I examine the possible impact of last-mile broadband providers’ imposing “termination fees” on third-party content providers or application providers to reach end-users. Broadband providers would engage in paid prioritization arrangements – that is, application and content providers could pay the broadband provider to have their traffic prioritized over competitors’ services. I argue that these arrangements would create inefficiency in the market and harm innovation. Because the last mile access broadband market is concentrated and consumers face switching costs, these concerns are particularly significant. Broadband providers insist that imposing these new charges will greatly improve network investment, and thus these charges are beneficial. I argue that this is not the case. Possible higher revenues from discrimination may simply be returned to shareholders and not invested. Additionally, evidence suggests networks invest more under non-discrimination requirements, and paid prioritization schemes would divert money towards managing scarcity instead of expanding capacity. Paid prioritization could even create an incentive for broadband providers to create congestion to increase the price of prioritized service.
    Keywords: Network Neutrality, Internet, Market Power, Discrimination, Two-Sided Market, Prioritization, Broadband, Termination Fees
    JEL: L1 D4 L12 L13 C63 D42 D43
    Date: 2010–01
  10. By: Garima Gupta; Avih Rastogi
    Abstract: The twenty-first century will be the century of knowledge, indeed the century of the intellect. A nation’s ability to translate knowledge into wealth and social good through innovations will determine its future. Thus innovations hold the key to the creation as well as processing of knowledge. Consequently issues of generation, evaluation, protection and exploitation of intellectual property would become critically important all over the world. Their analysis of intellectual property rights (IPRs) is presented in two sections: in the first they deal with the concept of intellectual property rights and the rationale behind them. In the second section, focus is on the intellectual property rights in the Indian context.[Working Paper No. 0040]
    Keywords: knowledge, wealth, social good, innovations,generation, evaluation, protection, exploitation
    Date: 2010
  11. By: Huffman, Wallace E.; Fan, Xing; Schuring, Jessica
    Abstract: The objective of this paper is to identify the impact of public and private agriculturalresearch on multi-output multi-input profit maximizing decisions of Midwestern farmers. The mainhypothesis is that investments in public and private R&D shift outward the supply curves for cropand livestock outputs and, in some cases, reduce the demand for inputs. The study uses stateaggregate data for eight Midwestern states over 1960-2004. The own-price elasticities of demand forall inputs are shown to be negative, being larger for agricultural chemicals and energy that for farmcapital services, labor and other materials. Additional public agricultural research increases thesupply of crop and livestock outputs but biases revenue shares toward crop output. Additionalprivate R&D as in adoption of GM corn varieties shifts outward the supply curves for crops andlivestock outputs but biases revenue shares towards crop output. In contrast, an increase in theadoption of GM soybean varieties increases livestock output and deceases crop output. Publicagricultural research reduces the demand for capital services and energy and increases the demandfor agricultural chemicals, other materials, and labor. An increase in the availability of GM soybeanvarieties increases the demand for capital services, agricultural chemicals and other materials andhas weak negative effects on the demand for labor and energy. GM corn variety adoption reducesthe demand for energy but other effects are quite small.
    Keywords: Profit function; midwest agriculture; public research; technology; GMOs; multiple-inputs multiple output; crops
    Date: 2010–04–24
  12. By: Andrea Conte; Ariane Labat; Janos Varga; Žiga Žarnić
    Abstract: The aim of this paper is to analyse options for reforming the fragmented Chinese pension system that covers only 55 % of urban employees and a very small part of the rural population. After a brief history of pensions in China we present recent reform proposals and then discuss principles of pension reforms, with particular attention to reducing the pension contribution rates so that compliance could improve and coverage increase. As the Chinese population is ageing fast, we are presenting transition to a notional defined contribution (NDC) system as a model for adjusting the pension rules for increasing longevity. Transforming the accrued pension rights into NDC accounts and starting to apply the new NDC-inspired rules on indexation is not necessarily a jump into the unknown for the Chinese pensions system. Rather, it could be a useful and long-awaited clarification to the rules and a way to move towards a more uniform system nationwide. With the help of a simulation model based on Chinese data we produce scenarios for a range of pension reforms and assess their properties.
    Keywords: Oksanen,China, population ageing, pension reforms, notional defined contribution scheme,NDC
    JEL: H11 H55
    Date: 2010–06
  13. By: Wallace E. Huffman
    Abstract:  The USDA is attempting to shift more research funds into competitive grants involving collaboration across disciplines on large projects. This type of research structure raises a host of information and incentive issues. The objective of this paper is to shed new light on principal-agent problems that are likely to arise in this new funding structure.
    Keywords: incentives; Principal-agent model; team research; competitive grants; multi-disciplinary research
    Date: 2010–06–22

This nep-ino issue is ©2010 by Steffen Lippert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.