nep-ino New Economics Papers
on Innovation
Issue of 2020‒07‒13
eleven papers chosen by
Uwe Cantner
University of Jena

  1. Identifying Innovative Actors in the Electricicity Supply Industry Using Machine Learning: An Application to UK Patent Data By Dolphin, G.; Pollitt, M.
  2. The causal effects of R&D grants: evidence from a regression discontinuity By Pietro Santoleri; Andrea Mina; Alberto Di Minin; Irene Martelli
  3. Patents, Innovation, and Development By Bronwyn H. Hall
  4. Innovation, information, lobby and tort law under uncertainty. By Julien Jacob; Caroline Orset
  5. Innovation and imitation By Jess Benhabib; \'Eric Brunet; Mildred Hager
  6. Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective By Michael D. König; Kjetil Storesletten; Zheng Song; Fabrizio Zilibotti
  7. Do education updates bring new technologies into jobs? Evidence from linking text-data sources By Tobias Schultheiss; Uschi Backes-Gellner
  8. Patent Portfolios and Firms Technological Choices By Stefano Comino; Fabio M. Manenti
  9. Aggregate Elasticity of Substitution between Skills: Estimates from a Macroeconomic Approach By Jerzmanowski, Michal; Tamura, Robert
  10. Killers on the Road of Emerging Start-ups – Implications for Market Entry and Venture Capital Financing By Koski, Heli; Kässi, Otto; Braesemann, Fabian
  11. Evaluating the impact of public policies on large firms: a synthetic control approach to science industry transfer policies By Corinne Autant-Bernard; Ruben Fotso; Nadine Massard

  1. By: Dolphin, G.; Pollitt, M.
    Abstract: The recent history of the Electricity Supply Industry (ESI) of major western economies was marked by two fundamental changes: a transition toward liberalised electricity markets and a policy-led push to decarbonise the electricity generation portfolio. These changes not only affected the pace and nature of innovation activity in the sector but also altered the set of innovative actors. The present paper provides a methodology to identify these actors, which we apply to priority patents filed at the UK Intellectual Property Office over the period 1955-2016. The analysis also indicates that (i) the recent increase in innovation activity originates overwhelmingly from upstream Original Equipment Manufacturers and (ii) innovation activity in `green' electricity supply technologies slowed down in recent years.
    Keywords: innovation, electricity sector, machine learning
    JEL: L94 O31 O38
    Date: 2020–03–03
  2. By: Pietro Santoleri; Andrea Mina; Alberto Di Minin; Irene Martelli
    Abstract: Direct public support for business R&D is a well-established remedy to market failures, yet empirical evidence on its effectiveness yields conflicting results. The paper investigates the impact of the first European public R&D grant program targeting small and medium enterprises (i.e. the SME Instrument) on a wide range of firm outcomes. We leverage the assignment mechanisms of the policy and employ a sharp regression discontinuity design to provide the broadest quasi-experimental evidence on R&D grants over both geographical and sectoral scopes. Results show that grants trigger sizable impacts. They increase investment, notably in intangibles, and innovation outcomes as measured by cite-weighted patents; they trigger faster growth in assets, employment and revenues; they lead to higher likelihood of receiving follow-on equity financing and lower failure chances. These effects tend to be larger for firms that are smaller and younger, or operating in sectors characterized by higher financial frictions. Furthermore, responses are stronger in countries and regions with lower economic development. The paper provides extensive evidence that the beneficial effects of R&D grants materialize through funding rather than certification effects.
    Keywords: Regression discontinuity design; Research and development; Innovation Policy; SMEs.
    Date: 2020–06–29
  3. By: Bronwyn H. Hall
    Abstract: I survey some recent research on the role of patents in encouraging innovation and growth in developing economies, beginning with a brief history of international patent systems and facts about the current use of patents around the world. I discuss research on the implications of patents for international technology transfer and domestic innovation. This is followed by a review of recent work by myself and co-authors on regional patent systems, the impact of patents on firm performance, and the impact on pharmaceutical patenting and domestic innovation. The conclusion suggests that patents may be relatively unimportant in development, even for middle income countries.
    JEL: L65 O25 O30 O34
    Date: 2020–05
  4. By: Julien Jacob; Caroline Orset
    Abstract: Recent environmental policies favour the ’pollutant-payer’ Principle. This principle points out the pollutant financial liability for potential incidents induced by its activities. Investing in technological innovations generates uncertainty on the future returns, as well as on the damages that such innovations could involve and on the cost to reimburse in the event that of troubles. To reduce this uncertainty, the firm has the opportunity to acquire information, for example through research activities, on its project’s potential consequences on human health and the environment. Nevertheless, in their efforts to achieve and/or to maintain a marketing authorisation with the agency, firms may develop specific strategies to exploit scientific uncertainty. They may produce favourable scientific findings. In case of accident, the firm utilising this type of behaviour can be legally charged. We then analyse whether liability rules and tort law incentive the firm both to invest in research and development to reduce the uncertainty and to decrease miscommunication on the results.
    Keywords: health and environmental risks, industrial risks, information acquisition, innovation, liability rules, lobby.
    JEL: D01 D72 K32 Q57
    Date: 2020
  5. By: Jess Benhabib; \'Eric Brunet; Mildred Hager
    Abstract: We study several models of growth driven by innovation and imitation by a continuum of firms, focusing on the interaction between the two. We first investigate a model on a technology ladder where innovation and imitation combine to generate a balanced growth path (BGP) with compact support, and with productivity distributions for firms that are truncated power-laws. We start with a simple model where firms can adopt technologies of other firms with higher productivities according to exogenous probabilities. We then study the case where the adoption probabilities depend on the probability distribution of productivities at each time. We finally consider models with a finite number of firms, which by construction have firm productivity distributions with bounded support. Stochastic imitation and innovation can make the distance of the productivity frontier to the lowest productivity level fluctuate, and this distance can occasionally become large. Alternatively, if we fix the length of the support of the productivity distribution because firms too far from the frontier cannot survive, the number of firms can fluctuate randomly.
    Date: 2020–06
  6. By: Michael D. König (Vrije Universiteit Amsterdam, School of Business and Economics); Kjetil Storesletten (Department of Economics, University of Oslo); Zheng Song (Chinese University of Hong Kong, Department of Economics); Fabrizio Zilibotti (Cowles Foundation, Yale University)
    Abstract: We construct a model of rm dynamics with heterogenous productivity and distortions. The productivity distribution evolves endogenously as the result of the decisions of ï¬ rms seeking to upgrade their productivity over time. Firms can adopt two strategies toward that end: imitation and innovation. The theory bears predictions about the evolution of the productivity distribution. We structurally estimate the stationary state of the dynamic model targeting moments of the empirical distribution of R&D and TFP growth in China during the period 2007-2012. The estimated model ts the Chinese data well. We compare the estimates with those obtained using data for Taiwan and ï¬ nd the results to be robust. We perform counterfactuals to study the effect of alternative policies. We ï¬ nd large effects of R&D misallocation on long-run growth.
    Keywords: China, Imitation, Innovation, Misallocation, Productivity, R&D, Subsidies, Taiwan, TFP Growth, Traveling Wave
    JEL: O31 O33 O47
    Date: 2020–06
  7. By: Tobias Schultheiss; Uschi Backes-Gellner
    Abstract: Staying competitive requires firms and workers to use the latest technology. Updating educational curricula may help with meeting such requirements by bringing new technologies faster into jobs. To estimate the technology diffusion effect of curriculum updates, we combine text data from occupational curricula and from job advertisements. With additional innovation data we control for the natural spread of technologies. We examine whether curriculum updates (introducing a particular technology such as computer-numerical-controlled machinery, computer-aided design software or desktop publishing solutions) led to firms adopting and integrating these technologies earlier into the jobs of updated occupations. We find that, as measured by technology mentions in job advertisements, curriculum updates substantially accelerate technology diffusion into jobs, especially into those of smaller non-innovative firms.
    JEL: O33 I25 J23
    Date: 2020–06
  8. By: Stefano Comino (Department of Economics and Statistics - University of Udine); Fabio M. Manenti (Department of Economics and Management - University of Padova)
    Abstract: In many industrial sectors, firms amass large patents portfolios to reinforce their bargaining position vis a vis competitors. In a context where patents have a pure strategic nature, we discuss how the presence and the effectiveness of a patent system affect firms technological decisions. Specifically, we present a two-stage game where firms first choose whether to agglomerate (i.e. develop technologies for the same technological territory) or to separate (i.e. develop technologies for different territories) and then they take their patenting decisions. We show that strong patents may distort technological choices yielding to firms to follow inefficient technological trajectories in an attempt to reduce competitors’ patenting activity. While an increase in the strength of patent rights − i.e. the extent to which patents can be used to extract value − undoubtedly distorts firms choices, the impact of a larger scope − the degree to which patent protection carries out in the adjacent ares as well − is ambiguous. We also discuss how such distortions change when one firm is prevented from obtaining its optimal number of patents and when firms patenting activities generate additional market value.
    Keywords: patent portfolios, patent strength and scope, technological territory, strategic patenting
    JEL: D43 L13
    Date: 2020–06
  9. By: Jerzmanowski, Michal; Tamura, Robert
    Abstract: We estimate the elasticity of substitution between high-skill and low-skill workers using panel data from 32 countries during 1970-2015. Most existing estimates, which are based only on U.S. micro data, find a value close to 1.6. We bring international data together with a theory-informed macro approach to provide new evidence on this important macroeconomic parameter. Using the macro approach we find that the elasticity of substitution between tertiary-educated workers and those with lower education levels falls between 1.8 and 2.6, which is higher than previous estimates but within a plausible range. In some specifications, estimated elasticity is above the value required for strong skill-bias of technology, suggesting strong skill-bias is not implausible.
    Keywords: elasticity of substitution, high-skill labor, low-skill labor, skill premium, strong skill-bias, endogenous directed technology
    JEL: E24 E25 J31 O11
    Date: 2020–05–28
  10. By: Koski, Heli; Kässi, Otto; Braesemann, Fabian
    Abstract: Abstract This paper empirically studies the effect of acquisitions made by the large US-based technology companies on the entry dynamics and venture capital financing in different product markets. We use data from 742 product markets globally, distinguishing the US and European markets, for the years 2003-2018. The estimation results based on the difference-in-differences estimation suggest that the technology giants’ buyouts subsequently reduced market entry rates and decreased available venture capital funding in the target product markets of tech giants’ acquisitions. In other words, the acquisitions of technology giants seem to generate the so-called kill zone effect. Our empirical analysis further suggests that this effect was strengthened during the 2010s when large technology companies gained increasing access to user data. Furthermore, we find that technology giants’ acquisitions of platform companies have decreased market entry in non-platform markets. In the US, unlike in the EU area, also available venture capital financing has declined in such non-platform markets from which technology giants have acquired companies.
    Keywords: Acquisitions, Venture capital funding, Competition, Technology giants
    JEL: G24 G34 L1 L41
    Date: 2020–07–01
  11. By: Corinne Autant-Bernard (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint Etienne, France); Ruben Fotso (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint Etienne, France); Nadine Massard (Université Grenoble Alpes, CNRS, INRA, Grenoble INP, GAEL, 38000 Grenoble, France)
    Abstract: Large firms dominate R&D investment in most countries and receive the majority of public R&D funding. Due to methodological difficulties, however, evaluation of the effect of government-sponsored R&D programmes mainly focuses on small- and medium-sized enterprises. The scarcity of large firms and their heterogeneity hampers the ability to find proper counterfactuals for very large companies and makes it difficult to use proper inference methods to measure the impact of a specific policy. In order to address these methodological issues, we propose using the synthetic control method, initially developed by Abadie et al. (2010) to evaluate programmes on a regional scale. We apply this method to evaluate the impact of a new French science-industry transfer initiative and compare the results with the random trend model and more standard counterfactual approaches. Based on data covering a long pre-treatment period (1998–2011) and ongoing treatment period (2012–2015), we reveal a convergence between the results obtained with the synthetic control method and the random trend model, and demonstrate that traditional counterfactual evaluation methods are not appropriate for large firms. Moreover, the synthetic control method has the advantage of providing an individual assessment of the policy impact on each firm. In the specific case of the French science-industry transfer initiative, it reveals that the impact on private R&D is highly heterogenous both on RD inputs and cooperation behaviours. Beyond this specific transfer policy, this study suggests that the synthetic control method opens new research perspectives in policy impact evaluation at the firm level.
    Keywords: impact evaluation, R&D policy, large firms, synthetic control method, Technological Research Institutes (TRIs)
    JEL: C23 D22 O38
    Date: 2020

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