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on Innovation |
| By: | Andreas Haufler; Dirk Schindler |
| Abstract: | Many countries have introduced patent box regimes in recent years, offering a reduced tax rate to businesses for their IP-related income. Patent boxes are supposed to increase innovative activity, but they are also suspected to aim at attracting inward profit shifting from multinational firms. In this paper, we analyze the effects of patent box regimes when countries can simultaneously use patent boxes and R&D subsidies to promote innovation. We show that when countries set their tax policies unilaterally, innovation is fostered, at the margin, only by the R&D subsidy. The patent box tax rate is instead targeted at attracting international profit shifting, and it is optimally set below the corporate tax rate. With cooperative tax setting, the optimal royalty tax rate is instead equal to, or even above, the statutory corporation tax. Hence, patent box regimes emerge in the decentralized policy equilibrium, but never under policy coordination. Enforcing a nexus principle, as proposed by the OECD, is helpful to mitigate harmful competition for paper profits, but it comes at the price of increased strategic competition in direct R&D subsidies to attract physical R&D units instead of intangible patents. |
| Keywords: | R&D investment, patent boxes, investment tax credits, profit shifting, tax competition |
| JEL: | H25 H87 F23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8640&r=all |
| By: | Kathrin Wernsdorf; Markus Nagler; Martin Watzinger |
| Abstract: | Does access to information and communication technologies (ICT) increase innovation? We examine this question by exploiting the staggered adoption of BITNET across U.S. universities in the 1980s. BITNET, an early version of the Internet, enabled e-mail-based knowledge exchange and collaboration among academics. After the adoption of BITNET, university-connected inventors increase patenting substantially. The effects are driven by collaborative patents by new inventor teams. The patents induced by ICT are exclusively science-related and stem from fields where knowledge can be codified easily. In contrast, we neither find an effect on patents not building on science nor on inventors unconnected to universities. |
| Keywords: | ICT, communication, knowledge diffusion, science-based innovation, university-patenting |
| JEL: | H54 L23 L86 O30 O32 O33 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8646&r=all |
| By: | Chu, Angus C. |
| Abstract: | This survey provides a selective review of the literature on patent policy, innovation and economic growth. The patent system is a useful policy tool for stimulating innovation given its importance on technological progress and economic growth. However, the patent system is a multi-dimensional system, which features multiple patent policy instruments. In this survey, we review some of the commonly discussed patent policy instruments, such as patent length, patent breadth and blocking patents, and also use a canonical Schumpeterian growth model to demonstrate their different effects on innovation and the macroeconomy. |
| Keywords: | patent policy, innovation, economic growth |
| JEL: | O3 O4 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103643&r=all |
| By: | Matt Marx; Aaron Fuegi |
| Abstract: | We curate and characterize a complete set of citations from patents to scientific articles, including nearly 16 million from the full text of USPTO and EPO patents. Combining heuristics and machine learning, we achieve 25% higher performance than machine learning alone. At 99.4% accuracy, coverage of 87.6% is achieved, and coverage above 90% with accuracy above 93%. Performance is evaluated with a set of 5,939 randomly-sampled, cross-verified “known good” citations, which the authors have never seen. We compare these “in-text” citations with the “official” citations on the front page of patents. In-text citations are more diverse temporally, geographically, and topically. They are less self-referential and less likely to be recycled from one patent to the next. That said, in-text citations have been overshadowed by front-page in the past few decades, dropping from 80% of all paper-to-patent citations to less than 40%. In replicating two published articles that use only citations on the front page of patents, we show that failing to capture those in the body text leads to understating the relationship between academic science and commercial invention. All patent-to-article citations, as well as the known-good test set, are available at http://relianceonscience.org. |
| JEL: | O31 O32 O33 O34 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27987&r=all |
| By: | Lauren Cohen; Umit G. Gurun; Quoc H. Nguyen |
| Abstract: | No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will flock to (and innovation will occur where) the returns to innovative capital are the highest. In this paper, we document a strong empirical pattern in green patent production. Specifically, we find that oil, gas, and energy producing firms – firms with lower Environmental, Social, and Governance (ESG) scores, and who are often explicitly excluded from ESG funds’ investment universe – are key innovators in the United States’ green patent landscape. These energy producers produce more, and significantly higher quality, green innovation. Our findings raise important questions as to whether the current exclusions of many ESG-focused policies – along with the increasing incidence of explicit divestiture campaigns – are optimal, or whether reward-based incentives would lead to more efficient innovative outcomes. |
| JEL: | G11 G30 O31 O32 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27990&r=all |
| By: | Alexander Moerchel; Frank Tietze; Leonidas Aristodemou; Pratheeba Vimalnath |
| Abstract: | The Covid-19 pandemic exposed firms, organisations and their respective supply chains which are directly involved in the manufacturing of products that are critical to alleviating the effects of the health crisis, collectively referred to as the Crisis-Critical Sector,to unprecedented challenges. Firms from other sectors, such as automotive, luxury and home appliances, have rushed into the Crisis-Critical Sector in order to support the effort to upscale incumbent manufacturing capacities, thereby introducing Intellectual Property (IP)related dynamics and challenges. We apply an innovation ecosystem perspective on the Crisis-Critical Sector and adopt a novel visual mapping approach to identify IP associated challenges and IP specific dynamic developments during and potentially beyond the crisis.In this paper, we add methodologically by devising and testing a visual approach to capturing IP related dynamics in evolving innovation ecosystems and contribute to literature on IP management in the open innovation context by proposing paraground IP as a novel IP type.Finally, we also deduce managerial implications for IP management practitioners at both incumbent firms and new entrants for navigating innovation ecosystems subject to crisis-induced dynamic shifts. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2010.10086&r=all |
| By: | Gergo Toth; Zoltan Elekes; Adam Whittle; Changjun Lee; Dieter F. Kogler |
| Abstract: | This paper assesses the network robustness of the technological capability base of 269 European metropolitan areas against the potential elimination of some of their capabilities. By doing so it provides systematic evidence on how network robustness conditioned the economic resilience of these regions in the context of the 2008 economic crisis. The analysis concerns calls in the relevant literature for more in-depth analysis on the link between regional economic network structures and the resilience of regions to economic shocks. By adopting a network science approach that is novel to economic geographic inquiry, the objective is to stress-test the technological resilience of regions by utilizing information on the co-classification of CPC classes listed on European Patent Office patent documents. Findings from a regression analysis indicate that metropolitan regions with a more robust technological knowledge network structure exhibit higher levels of resilience with respect to changes in employment rates. This finding is robust to various random and targeted elimination strategies concerning the most frequently combined technological capabilities. Regions with high levels of employment in industry but with vulnerable technological capability base are particularly challenged by this aspect of regional economic resilience. |
| Keywords: | regional economic resilience, network robustness, metropolitan regions, technology space |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2048&r=all |
| By: | Elert, Niklas (Research Institute of Industrial Economics (IFN)); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Researchers increasingly recognize that entrepreneurial employees, intrapreneurs, play a critical role in innovation. As with regular entrepreneurship, however, the value of intrapreneurial activity depends on the firm-specific and societal reward structures that intrapreneurs face. Ideally, these rules of the game are such that they reward intrapreneurship that is beneficial for the firm and the economy. When this is not the case, intrapreneurship can be beneficial for the firm but not for society, damaging for the firm yet beneficial for society, or downright destructive. We offer a taxonomy describing how society’s rules and firm rules interact to produce different intrapreneurial outcomes. |
| Keywords: | Intrapreneurship; Entrepreneurship; Entrepreneurial behavior |
| JEL: | D02 J24 L26 M14 O17 O31 |
| Date: | 2020–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1367&r=all |
| By: | Ara Jo (Center of Economic Research, ETH Zürich, Zürichbergstrasse 18, 8089 Zürich, Switzerland.) |
| Abstract: | The elasticity of substitution between clean and dirty energy and the direction of technological change are central parameters in discussing one of the most challenging questions today, climate change. Despite their importance, there are few studies that empirically estimate these key parameters. In this paper, I estimate the elasticity of substitution between clean and dirty energy from micro data, jointly with technological parameters that reflect the direction of technological change within the energy aggregate. I find estimates of the elasticity of substitution ranging between 2 and 3. The largely dirty-energy-biased technological change observed in the data validates the framework of directed technological change, given the historical movement of relative energy prices and the estimated elasticity of substitution above unity. However, I also find suggestive evidence that clean-energy-augmenting technology is growing faster than dirty-energy-augmenting technology in recent years with changes in relative energy prices and higher subsidies for clean energy. |
| Keywords: | Elasticity of substitution, directed technical change, climate change |
| JEL: | Q40 Q55 Q54 O33 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:20-344&r=all |
| By: | Michael Fritsch; Michael Wyrwich; ; ; |
| Abstract: | We investigate how initial conditions that existed in East Germany at the end of the socialist regime impact regional development during the turbulent shock transition to a market economic system. Our investigation spans a period of almost 30 years. Both the self-employment rate (an indication of the existence of a pre-socialist entrepreneurial tradition) and the share of the workforce with a tertiary degree have a strong positive effect on regional development. We conclude that knowledge and a tradition of entrepreneurship have long-run positive effects on development in regions that face disruptive shocks. Entrepreneurship and knowledge play a less important role for development across West German regions, where no significant shocks occurred. |
| Keywords: | Entrepreneurship, knowledge, economic development, history, transformation, East Germany |
| JEL: | L26 R11 N93 N94 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2050&r=all |
| By: | Lars Mewes; Tom Broekel; ; ; |
| Abstract: | One the one hand, complex technologies o↵er substantial economic benefits, and on the other, they are difficult to invent and to imitate, and they refuse a fast dissemination. This two-sidedness motivates the idea that regions’ competitive advantages and, in consequence, their economic growth, originate in their ability to produce and utilize complex technologies. However, the relationship between technological complexity and regional economic growth has rarely been empirically investigated. Here, we address this pressing issue by assessing the complexity of technological activities in 159 European NUTS 2 regions and relating it to their economic growth from 2000 to 2014. Our empirical results suggest that technological complexity is an important predictor of regional economic growth. A 10% increase in complexity is associated with a 0.45% GDP per capita growth. By showing that technological complexity is important for regional economic growth, our results fuel current policy debates about optimal regional policies such as the Smart Specialization strategy. |
| Keywords: | Knowledge Complexity, Technological Complexity, Regional Economic Growth, Patent Data |
| JEL: | O10 O33 R11 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2049&r=all |
| By: | Michael Fritsch (Friedrich Schiller University Jena and Halle Institute for Economic Research (IWH), Germany); Michael Wyrwich (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany) |
| Abstract: | We investigate how initial conditions that existed in East Germany at the end of the socialist regime impact regional development during the turbulent shock transition to a market economic system. Our investigation spans a period of almost 30 years. Both the self-employment rate (an indication of the existence of a pre-socialist entrepreneurial tradition) and the share of the workforce with a tertiary degree have a strong positive effect on regional development. We conclude that knowledge and a tradition of entrepreneurship have long-run positive effects on development in regions that face disruptive shocks. Entrepreneurship and knowledge play a less important role for development across West German regions, where no significant shocks occurred. |
| Keywords: | Entrepreneurship, knowledge, economic development, history, transformation, East Germany |
| JEL: | L26 R11 N93 N94 |
| Date: | 2020–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2020-017&r=all |