nep-ino New Economics Papers
on Innovation
Issue of 2017‒08‒27
fourteen papers chosen by
Uwe Cantner
University of Jena

  1. Intellectual Property Boxes and the Paradox of Price Discrimination By Ben Klemens
  2. Innovation, inequality and the skill premium By Riccardo Leoncini
  3. Origins and Pathways of Innovation in the Third Industrial Revolution: Sweden, 1950-2013 By Taalbi, Josef
  4. Rising Longevity, Fertility Dynamics, and R&D-based Growth By Koichi Futagami; Kunihiko Konishi
  5. Accounting for Growth in the Age of the Internet The Importance of Output-Saving Technical Change By Hulten, Charles R.; Nakamura, Leonard I.
  6. Innovation und Wachstum als Herausforderung für den Mittelstand: Update der Unternehmersicht 2017 By Kranzusch, Peter; May-Strobl, Eva; Levering, Britta
  7. Business cycles, innovation and growth: welfare analysis By Marcin Bielecki
  8. Cascading Innovation By Mirko Draca; Vasco Carvalho
  9. How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy By Cozzi, Guido; Pataracchia, Beatrice; Pfeiffer, Philipp; Marco, Ratto
  10. User-Side Intermediaries and the Local Embedding of Low Carbon Technologies By Jake Barnes
  11. ICT and resilience in times of crisis: Evidence from cross-country micro moments data By Bertschek, Irene; Polder, Michael; Schulte, Patrick
  12. Digital Economics By Avi Goldfarb; Catherine Tucker
  13. Kooperationen zwischen etabliertem Mittelstand und Start-ups By Löher, Jonas; Paschke, Max; Schröder, Christian; Norkina, Alinia
  14. Technological Dynamism in a Stagnant Sector: Safety at Sea during the Early Industrial Revolution By Morgan Kelly; Cormac Ó Gráda

  1. By: Ben Klemens (U.S. Treasury)
    Abstract: This paper considers the methods by which some existing laws and proposals offer different tax rates to different types of capital, a scheme variously known as a patent box, innovation box, or intellectual property box (IP box). It presents a model of international tax competition—what tax experts call a race to the bottom and competition experts call Bertrand competition—with some capital fixed and some easily moved across borders. The model finds that the highest expected tax revenue from mobile IP for a country hosting a large amount of fixed, non-IP capital comes from assigning a single tax rate to all types of capital—that is, from not implementing an IP box. In the context of Bertrand competition, firms optimize revenue when not engaging in price discrimination across types of customers. As a research and development (R&D) credit, several examples show that the IP box is more easily manipulated than a traditional credit on R&D expenses.
    Date: 2017–03
  2. By: Riccardo Leoncini (Freiburg Institute for Advanced Studies (FRIAS), University of Freiburg (D); Research Institute on Sustainable Economic Growth (IRCrES), National Research Council, Milan (I); AlmaMater University of Bologna (I).)
    Abstract: The relationship between innovation and inequality is analysed on a panel of 148 countries for a 50 year span, from 1963-2012. A non linear relationship is found that links innovation to inequality, and which appears to be rather different whether variables representing either input or output of innovative effort are considered. In both cases in fact there appears to be a threshold that once is overcame reverses the relationship. In particular, in the case of innovative inputs a positive relationship with inequality reverses once the threshold is crossed, while the opposite holds for innovative outputs, for which the relationship is initially negative to become positive as, for instance, the number of patents increases over a certain threshold. It is nally possible to exploit these di erent patterns, to provide a truly innovation-based analysis of the patterns of skill premium for US, France, Germany and Great Britain. In all these case, the ratio of R&D to Patents shows a robust negative relationship with the skill premium. In particular, when the ratio of R&D to Patents is low (implying a relatively high overall level of appropriability) increasing patterns of the skill premium result. The opposite happens when the ratio is high (implying a relatively low appropriability level), determining a decrease in the skill premium.
    Keywords: innovation, income inequality, skill premium
    JEL: O33 D63 J24
    Date: 2017–08
  3. By: Taalbi, Josef (Department of Economic History, Lund University)
    Abstract: This study examines the factors that have shaped the long-term evolution of the ICT industry in Sweden, 1950-2013. Exploiting a new historical micro-database on actual innovation output, the driving forces and technological interdependencies in the third industrial revolution are chronicled. The results of this study support some stylized facts about innovational interdependencies in general-purpose technologies: a closely knitted set of industries have provided positive and negative driving forces for the development of ICT innovations. The historical evolution of the GPT surrounding microelectronics can in this perspective be described as a sequence of development blocks.
    Keywords: ICT; General-Purpose Technologies; Innovation Biographies; Network Analysis; Development Blocks
    JEL: L16 N14 O30
    Date: 2017–04–26
  4. By: Koichi Futagami (Graduate School of Economics, Osaka University); Kunihiko Konishi (Research Fellow of the Japan Society for the Promotion of Science (JSPS))
    Abstract: This study constructs an overlapping-generations model with endogenous fertility, mortality, and R&D activities. We demonstrate that the model explains the observed fertility dynamics of developed countries. When the level of per capita wage income is either low or high, an increase in such income raises the fertility rate. When the level of per capita wage income is in the middle, an increase in such income decreases the fertility rate. The model also predicts the observed relationship between population growth and innovative activity. At first, both the rates of population growth and technological progress increase, that is, there is a positive relationship. Thereafter, the rate of population growth decreases but the rate of technological progress increases, showing a negative relationship.
    Keywords: Fertility, Mortality, R&D
    JEL: D91 J13 O10
    Date: 2017–08
  5. By: Hulten, Charles R. (University of Maryland and NBER); Nakamura, Leonard I. (Federal Reserve Bank of Philadelphia)
    Abstract: We extend the conventional Solow growth accounting model to allow innovation to affect consumer welfare directly. Our model is based on Lancaster’s New Approach to Consumer Theory, in which there is a separate “consumption technology” that transforms the produced goods, measured at production cost, into utility. This technology can shift over time, allowing consumers to make more efficient use of each dollar of income. This is “output-saving” technical change, in contrast to the Solow TFP “resource-saving” technical change. One implication of our model is that living standards can rise at a greater rate than real GDP growth.
    Keywords: consumers; accounting; consumer welfare; GDP
    JEL: E01 O3 O4
    Date: 2017–07–31
  6. By: Kranzusch, Peter; May-Strobl, Eva; Levering, Britta
    Abstract: Um seine Wettbewerbsfähigkeit zu sichern, setzt der Mittelstand vor allem auf Innovation und Wachstum. Dies ist das Ergebnis der Unternehmensbefragung zu den Herausforderungen des Mittelstands. Anders als die Experten im Zukunftspanel Mittelstand 2017 stellen die Unternehmen die Digitalisierung weni-ger in den Vordergrund. Von insgesamt 13 identifizierten Handlungsfeldern erachten mittelständische Unternehmen zudem die Fachkräftegewinnung und rechtliche Rahmenbedingungen als wichtige Herausforderungen. Unterschiedliche Herausforderungen werden im Hinblick auf Unternehmenscharakteristika, wie Alter, Größe und Wirtschaftszweig, aufgezeigt.
    Keywords: Mittelstand,Herausforderungen des Mittelstands,Mittelstandspolitik,German Mittelstand,challenges for the Mittelstand,Mittelstand policy,SME policy
    JEL: L20 L26
    Date: 2017
  7. By: Marcin Bielecki (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Endogenous growth literature treats deliberate R&D effort as the main engine of long-run growth. It has been already recognized that R&D expenditures are procyclical. This paper builds a microfounded model that generates procyclical aggregate R&D investment as a result of optimizing behavior by heterogeneous monopolistically competitive firms. I find that business cycle fluctuations affect the aggregate endogenous growth rate of the economy so that transitory shocks leave lasting level effects on the economy’s Balanced Growth Path. This result stems from both procyclical R&D expenditures of the incumbents and procyclical firm entry rates. This mechanism generates economically significant hysteresis effects, increasing the welfare cost of business cycles by two orders of magnitude relative to the exogenous growth model. Coupled with potential to affect endogenous growth rates, ample space for welfare improving policy interventions arises. The paper evaluates the effects of selected subsidy schemes and finds some of them welfare improving.
    Keywords: business cycles, firm dynamics, innovation, growth, welfare analysis
    JEL: E32 E37 L11 O31 O32 O38 O40
    Date: 2017
  8. By: Mirko Draca (University of Warwick); Vasco Carvalho (U of Cambridge)
    Abstract: US government spending since World War II has been characterized by large investments in defense related high-tech goods and services and R&D. In turn, this means that the Department of Defense (DoD) has had a large role in funding corporate innovation in the US. This paper (i) quantifies the impact of military procurement spending on corporate innovation by publicly listed firms and (ii) shows that DoD impact on innovation was not limited to the winners of defense contracts but instead cascaded through the supply chain of DoD contractors via indirect market size effects, working through firm-to-firm input linkages. We use a database of detailed, historical procurement contracts for all Department of Defense (DoD) prime contracts since 1966. Product-level spending shifts are used as a source of exogenous variation in firm-level procurement receipts. We combine this data with information on the supply chain linkages of publicly listed firms. Our estimates indicate that defense procurement has a positive direct impact on patenting and R&D investment, with an elasticity of approximately 0.07 across both measures of innovation for DoD contractors. Further, our estimates imply that the derived demand for inputs following the award of a DoD contract constitutes a large indirect market size effect for the suppliers of DoD contractors. These indirect market size effects in turn induce innovation cascades working up the supply chain. We find that the elasticity of innovation outcomes to indirect DoD market size shocks is about half of that estimated for direct contractors but affects a much larger number of firms, roughly doubling the effect of defense spending on aggregate innovation.
    Date: 2017
  9. By: Cozzi, Guido (University of St. Gallen); Pataracchia, Beatrice (European Commission – JRC); Pfeiffer, Philipp (Technische Universitat Berlin); Marco, Ratto (European Commission – JRC)
    Abstract: The macroeconomic experience of the last decade stressed the importance of jointly studying the growth and business cycle fluctuations behavior of the economy. To analyze this issue, we embed a model of Schumpeterian growth into an estimated medium-scale DSGE model. Results from a Bayesian estimation suggest that investment risk premia are a key driver of the slump following the Great Recession. Endogenous innovation dynamics amplifies financial crises and helps explain the slow recovery. Moreover, financial conditions also account for a substantial share of R&D investment dynamics.
    Keywords: endogenous growth; R&D; Schumpeterian growth; Bayesian estimation
    JEL: E3 O3 O4
    Date: 2017–05
  10. By: Jake Barnes (SPRU – Science Policy Research Unit, University of Sussex, Falmer, Brighton, BN1 9SL, UK, Department of Geography, University of Exeter, Rennes Drive, Exeter, EX4 4RJ)
    Abstract: This article draws on three theoretical fields, innovation intermediaries, socio-technical transitions and domestication studies to develop a process perspective of how user-side intermediary organisations seek to locally embed low carbon technologies. The term local embedding is increasingly used by transition researchers in a variety of ways. The first contribution of this paper is to explore and substantiate the concept of local embedding as the process of integrating technologies into local contexts of use. Intermediary organisations are conceived as contributing to local embedding where they facilitate, configure and broker change towards configurations that work. Nonetheless, understanding how these key intermediary processes relate as well as the influence of system dynamics on the work intermediaries undertake is still largely uncharted territory. The paper’s second contribution is a process perspective on the agency of intermediary organisations in local embedding. The resulting perspective offers insights into the agency of user-side intermediaries and later phases of transition processes.
    Keywords: Intermediary organisations, local embedding, socio-technical transitions, domestication
    Date: 2017–08
  11. By: Bertschek, Irene; Polder, Michael; Schulte, Patrick
    Abstract: ICT-intensive firms are often found to have a better performance than their non-ICTintensive counterparts. Along with investing in ICT capital they have to adapt their production and business processes in order to reap the potentials implied by the use of ICT. Are these firms also more resilient in times of crisis? We study this question by exploiting a novel and unique data set from the Microments Database. Covering 12 countries, 7 industries and the period from 2001 to 2010, the data allow us to distinguish between ICT-intensive and non-ICT-intensive firms within industries. We find evidence that indeed during the crisis in 2008 and 2009, ICT-intensive firms were hit less hard with respect to their productivity. This holds in particular for firms from service industries. Moreover, ICT-intensive firms were also more successful in introducing process innovations during that period which could explain their better productivity performance compared to non-ICT intensive firms.
    Keywords: ICT,innovation,productivity,economic crisis,resilience,meso-level data
    JEL: H12 J24 O31 O47
    Date: 2017
  12. By: Avi Goldfarb; Catherine Tucker
    Abstract: Digital technology is the representation of information in bits. This technology has reduced the cost of storage, computation, and transmission of data. Research on digital economics examines whether and how digital technology changes economic activity. In this review, we emphasize the reduction in five distinct economic costs associated with digital economic activity: Search costs, replication costs, transportation costs, tracking costs, and verification costs.
    JEL: L81 L86 O33
    Date: 2017–08
  13. By: Löher, Jonas; Paschke, Max; Schröder, Christian; Norkina, Alinia
    Abstract: Die vorliegende Studie untersucht anhand von Experteninterviews die Motive, Formen sowie Herausforderungen und Erfolgsfaktoren von Kooperationen zwischen etablierten Mittelständlern und Start-ups. Während sich Start-ups durch die Kooperation den Zugang zu einem großen Netzwerk sowie branchenspezifisches Know-how erhoffen, motiviert Mittelständler der Zugang zu neuen Technologien und hochqualifizierten Fachkräften. Die Wahl der konkreten Kooperationsform leitet sich aus den jeweiligen Zielen ab. Dabei unterscheiden sich Kooperationen hinsichtlich ihrer Intensität sowie in ihrer juristischen Ausgestaltung. Damit beide Seiten erfolgreich zusammenkommen, sollte sich das Start-up bereits im Vorfeld mit den Bedürfnissen des potenziellen Kooperationspartners auseinandersetzen. Etablierte Mittelständler sollten hingegen ihr stark ausgeprägtes Sicherheitsdenken ablegen und eine innovationsfreundliche Kultur im Unternehmen etablieren. Insgesamt bietet die Zusammenarbeit für beide Seiten ein großes Potenzial. Dabei profitiert das Start-up von einer effizienten Zusammenarbeit durch kurze Entscheidungswege in den inhabergeführten Unternehmen und der etablierte Mittelstand von einer höheren Wettbewerbsfähigkeit durch die Innovationsimpulse der Start-ups.
    Keywords: Kooperationen,Mittelstand,Innovationsstrategie,Start-Ups,Cooperation,Innovation Strategy
    JEL: D00 D80 L20 M10 O30
    Date: 2017
  14. By: Morgan Kelly; Cormac Ó Gráda
    Abstract: Against the consensus that sailing ship technology was stagnant during the early Industrial Revolution, we find striking improvements in safety at sea. Between 1760 and 1825, the risk of being wrecked for Atlantic shipping fell by one third, and of foundering by two thirds, reflecting improvements in seaworthiness and navigation respectively. Seaworthiness improved through replacing the traditional stepped deck ship with stronger flushed decked ones derived from Indian designs, and the increasing use of iron reinforcement. Improved navigation owed little to precise longitude estimation and stemmed mostly from accurate charts and instruments, and accessible manuals of navigational technique.
    Keywords: Technological progress; Shipping
    JEL: N0
    Date: 2017–06

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