nep-ino New Economics Papers
on Innovation
Issue of 2021‒02‒01
eight papers chosen by
Uwe Cantner
University of Jena

  1. The Economics of Crisis Innovation Policy: A Historical Perspective By Daniel P. Gross; Bhaven N. Sampat
  2. Robots, AI, and Related Technologies: A Mapping of the New Knowledge Base By Enrico Santarelli; Jacopo Staccioli; Marco Vivarelli
  3. Firm-level R&D after periods of intense technological innovation: the role of investor sentiment By Sirio Aramonte; Matthew Carl
  4. What about the regional level? Regional configurations of Technological Innovation Systems By Sebastian Rohe; Jannika Mattes
  5. Which Innovations for a Circular Business Model? A Product Life-Cycle Approach By Elisa Chioatto; Emy Zecca; Alessio D’Amato
  6. Automotive regions in transition: preparing for connected and automated vehicles By Michaela Trippl; Simon Baumgartinger-Seiringer; Elena Goracinova; David A. Wolfe
  7. Per Unit and Ad Valorem Royalties in a Patent Licensing Game By Marta Montinaro; Rupayan Pal; Marcella Scrimitore
  8. Sustainability and Industrial Challenge: The Hindering Role of Complexity By Tommaso Ciarli; Karolina Safarzynska

  1. By: Daniel P. Gross; Bhaven N. Sampat
    Abstract: Since the beginning of the COVID-19 pandemic, policymakers, researchers, and journalists have made comparisons to World War II. In 1940, a group of top U.S. science administrators organized a major coordinated research effort to support the Allied war effort, including significant investments in medical research which yielded innovations like mass-produced penicillin, antimalarials, and a flu vaccine. We draw on this episode to discuss the economics of crisis innovation. Since the objectives of crisis R&D are different than ordinary R&D (prioritizing speed, coordination, redundancy, and more), we argue that appropriate R&D policy in a crisis requires going beyond the standard Nelson-Arrow framework for research policy.
    JEL: H12 H56 N42 N72 O31 O32 O38
    Date: 2021–01
  2. By: Enrico Santarelli (Department of Economics, University of Bologna – Department of Economics and Management, University of Luxembourg); Jacopo Staccioli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – Institute of Economics, Scuola Superiore Sant’Anna, Pisa); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)
    Abstract: Using the entire population of USPTO patent applications published between 2002 and 2019, and leveraging on both patent classification and semantic analysis, this papers aims to map the current knowledge base centred on robotics and AI technologies. These technologies will be investigated both as a whole and distinguishing core and related innovations, along a 4-level core-periphery architecture. Merging patent applications with the Orbis IP firm-level database will allow us to put forward a threefold analysis based on industry of activity, geographic location, and firm productivity. In a nutshell, results show that: (i) rather than representing a technological revolution, the new knowledge base is strictly linked to the previous technological paradigm; (ii) the new knowledge base is characterised by a considerable – but not impressively widespread – degree of pervasiveness; (iii) robotics and AI are strictly related, converging (particularly among the related technologies) and jointly shaping a new knowledge base that should be considered as a whole, rather than consisting of two separate GPTs; (iv) the U.S. technological leadership turns out to be confirmed.
    Keywords: Robotics, Artificial Intelligence, General Purpose Technology, Technological Paradigm, Industry 4.0, Patents full-text
    JEL: O33
    Date: 2021–01
  3. By: Sirio Aramonte; Matthew Carl
    Abstract: Following periods of intense technological innovation, R&D is a critical driver of technology diffusion, but it is subject to frictions that can lower it below the level firms would undertake otherwise. We study whether sentiment can counterbalance these frictions and thus strengthen the link between firm-level R&D and lagged aggregate innovation. We find a positive answer for low-tech firms, which represent the main conduit for technology diffusion. The effect is stronger in the presence of informational externalities, that is when the results of experimentation funded by a company are observable by competitors. In contrast to the literature on sentiment and capital expenditures, the effect is weaker for financially constrained firms.
    Keywords: investor sentiment, technological innovation, R&D
    JEL: G02 G31 O32 O33
    Date: 2021–01
  4. By: Sebastian Rohe; Jannika Mattes
    Abstract: Regional innovation policy must not only strive for economic competitiveness, but also push novel and more sustainable technological solutions. The complex and multi-scalar process of developing and diffusing new technologies is captured by the Technological Innovation Systems (TIS) frame-work. However, the approach neglects regional variety and lacks a nuanced and systematic under-standing of how technological change plays out differently across places. We thus complement TIS with insights from the literature on Regional Innovation Systems (RIS), which offers manifold com-parisons and typologies of institutional contexts for regional innovation. We argue that three ideal-typical configurations – localist-grassroots, interactive-networked, and globalist-dirigiste – exist at the intersection between a technological and specific regional innovation system. We discuss how these regional configurations contribute differently to the development and functioning of the overall TIS and point to the innovation-related challenges they are confronted with. We illustrate our conceptual arguments with a brief comparative case study on three regions in the TIS for on-shore wind energy. Overall, this paper contributes to the literature on the geographies of innova-tion and sustainability transitions, introduces a framework for analyzing regional variety in TIS, and enables more fine-grained and place-specific policy interventions directed at fostering specific technologies at the regional level.
    Keywords: Technological Innovation System, Regional Innovation System, Innovation Policy, Geography of Sustainability Transitions, Onshore Wind Energy
    Date: 2021
  5. By: Elisa Chioatto (University of Ferrara, SEEDS); Emy Zecca (University of Ferrara, SEEDS); Alessio D’Amato (University Tor Vergata, SEEDS)
    Abstract: The Circular Economy concept has emerged to face current unsustainable economic trends. Circularity requires to go beyond mainstream linear business models in favour of new design strategies and production processes able to support an efficient use and a continuous flow of resources. Clarifying and promoting tools for embedding circularity in firms’ business models is becoming crucial to increase resource productivity and achieve competitive advantages. Notwithstanding eco-innovation has been recognized as a fundamental link to connect circular economy with business models restructuring, still little consensus exists on the boundaries and interlinkages among the concepts of Eco-Innovation, Circular Economy and Circular Business Models. This research contributes to the intersection of these different streams of the literature, and aims to understand which innovations can favour the transition from linear to closed-loop processes, and then to identify circular business models. Relying on a review of circular-oriented innovations, we recognize three main groups of innovations that are expected to change firms’ way of doing business in accordance with circularity, leading to the identification of an original Product Life-Cycle Archetype. Finally, relying on survey data in Emilia Romagna region, we check for the reliability of our theoretical framework in practice, analysing firms’ business strategies from a practical perspective and assessing the current implementation of an innovative path in accordance with circular priorities. The analysis reveals a positive engagement amongst the analysed firms in Emilia Romagna, in terms of cleaner production strategies. By contrast, any business innovation linked to the circular use of products has been found to be implemented.
    Keywords: Resource Efficiency, Eco-Innovation, Circular Economy, Circular Eco-Innovation, Circular Business Models, Small and Medium Enterprises
    JEL: L23 Q55 O32
    Date: 2020–12
  6. By: Michaela Trippl; Simon Baumgartinger-Seiringer; Elena Goracinova; David A. Wolfe
    Abstract: The advent of ‘connected and automated vehicles’ (C/AV) is posing substantial transformation challenges on traditional automotive regions across the world. This paper seeks to examine both conceptually and empirically how automotive regions reconfigure their industrial and support structures to promote new path development in the C/AV field. Drawing on recent conceptual advances at the intersection of evolutionary economic geography and innovation system studies, we develop an analytical framework that casts light on how regional preconditions provide platforms for asset modification that underpin different routes of transformation. We distinguish between a reorientation route and an upgrading route. The framework is applied to a comparative analysis of industrial path development and system reconfiguration towards C/AV in two automotive regions, namely Ontario (Canada) and the Austrian automotive triangle.
    Keywords: regional restructuring, new path development, asset modification, innovation system reconfiguration, connected and automated vehicles
    JEL: O33 R11 R58
    Date: 2020
  7. By: Marta Montinaro (University of Salento); Rupayan Pal (Indira Gandhi Institute of Development Research (IGIDR)); Marcella Scrimitore (University of Salento)
    Abstract: In a context of product innovation, we study two-part tariff licensing between a patentee and a potential rival which compete in a differentiated product market characterized by network externalities. The latter are shown to crucially affect the relative profitability of Cournot vs. Bertrand when a per unit royalty is applied. By contrast, we find that Cournot yields higher profits than Bertrand under ad valorem royalties, regardless of the strength of network effects.
    Keywords: Licensing, Product Innovation, Bertrand, Cournot, Network Effects
    JEL: L13 L20 D43
    Date: 2020–10
  8. By: Tommaso Ciarli (Science Policy Research Unit (SPRU), University of Sussex.); Karolina Safarzynska (Faculty of Economic Sciences, University of Warsaw.)
    Abstract: A transition to a low-carbon economy requires moving to the production of goods that are less energy- and material-intensive than current practices. This may prove difficult, as producer objectives may not align with reducing pollution, unless this is a consumer priority, or is imposed by regulations. It has been argued that changing lifestyles and consumer preferences can drive technological change towards sustainability. In this paper we use the model by Windrum et al. (2009b) to show that the interactions between the populations of consumers, producers and technologies, when product components are interdependent, generate complexity, as a result of which changing consumer preferences may be insufficient to achieve sustainability objectives. Complexity may influence negatively the rate and direction of innovations towards the production of greener goods, causing a vicious cycle. Firms tend to remain stuck in local optima of the existing technological landscape, if most consumers are satisfied with the non-green characteristics of goods. As a result, firms are less likely to explore innovation possibilities to improve environmental performance of their products, which in turn reduces consumer expectations with respect to the environmental quality of future goods. As pro-environment consumers also imitate the higher preferences for non-green characteristics, firms have even higher incentives to improve those characteristics in the current technological paradigm than to explore new greener paradigms. The toy model proposed in this paper can be applied to study diffusion of ‘green’ products in a number of industries and to study environmental policies that can reduce complexity. The paper also offers a selected review of micro and industry level models of sustainable transitions.
    Keywords: Sustainable transition; industry-demand co-evolution; interactions; complexity
    Date: 2020–11

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