nep-ino New Economics Papers
on Innovation
Issue of 2023‒01‒16
five papers chosen by
Uwe Cantner
University of Jena

  1. Patents that Match your Standards: Firm-level Evidence on Competition and Growth By Bergeaud Antonin; Schmidt Julia; Zago Riccardo
  2. On GVC and Innovation: What Is at Stake? By Yasmine Eissa; Chahir Zaki
  3. Acquisition-induced kill zone By Christopher Teh; Dyuti Banerjee; Chengsi Wang
  4. Slow Magic: Agricultural vs Industrial R&D Lag Models By Alston, Julian M.; Pardey, Philip G.; Serfas, Devin; Wang, Shanchao
  5. Beyond climate economics orthodoxy: impacts and policies in the agent-based integrated-assessment DSK model By Francesco Lamperti; Andrea Roventini

  1. By: Bergeaud Antonin; Schmidt Julia; Zago Riccardo
    Abstract: When a technology becomes the new standard, the firms that are leaders in producing this technology have a competitive advantage. Matching the semantic content of patents to standards and exploiting the exogenous timing of standardization, we show that firms closer to the new technological frontier increase their market share and sales. In addition, if they operate in a very competitive market, these firms also increase their R&D expenses and investment. Yet, these effects are temporary since standardization creates a common technological basis for everyone which allows followers to catch up and the economy to grow.
    Keywords: Standardization, Patents, Competition, Innovation, Text Mining
    JEL: L15 O31 O33
    Date: 2022
  2. By: Yasmine Eissa (Cairo University); Chahir Zaki (Cairo University)
    Abstract: This paper empirically investigates the impact of global value chains (GVC) participation on countries’ innovation performance. Highlighting the learning effect of foreign knowledge embedded in imported intermediate goods counters the argument that GVC participation is biased towards developed countries with skilled labor abundance. We construct a GVC knowledge spilloversindex by merging data on GVC from the EORA26 dataset with R&D of the trade partner. Results show a positive and significant effect of the GVC knowledge spillovers index on innovation measured by resident patent per capita. Likewise, we show that the quality of institutions, intellectual property agreements, competition policy and trade policy constitute a pile of interfering preconditions in the nexus between GVC participation and innovation. Our results remain robust when we use an instrumental variable approach to control for the endogeneity between GVC and innovation and when we use alternative measure for our two variables of interest
    Date: 2022–09–20
  3. By: Christopher Teh (UNSW Sydney); Dyuti Banerjee (Department of Economics, Monash University); Chengsi Wang (Department of Economics, Monash University)
    Abstract: We study the impact of a dominant incumbent’s acquisition on entry and R&D incentives in a model with multiple start-ups. The incumbent’s acquisition directly suppresses entry and can distort the non-target start-up’s R&D incentives by creating a kill zone. The reduced threat of entry can also cause the incumbent to shelve the acquired technology. Despite these negative effects, acquisitions generally affect consumer welfare ambiguously due to synergy benefits. We study the design of merger policies aimed at minimizing acquisition-related harms. We also show that entry-for-buyout may not be a valid defense for start-up acquisitions when accounting for non-target start-ups.
    Keywords: Acquisitions, Innovation, Start-ups, Merger Policy, Remedies
    JEL: G34 L12 L41 O31
    Date: 2022–12
  4. By: Alston, Julian M.; Pardey, Philip G.; Serfas, Devin; Wang, Shanchao
    Abstract: R&D is slow magic. It takes many years before research investments begin to affect productivity, but then they can affect productivity for a long time. Many economists get this wrong. Here we revisit the conceptual foundations for R&D lag models used to represent the temporal links between research investments and impact, review prevalent practice, and document and discuss a range of evidence on R&D lags in agriculture and other industries. Our theory and evidence consistently support the use of longer lags with a different overall lag profile than is typically imposed in studies of industrial R&D and government compilations of R&D knowledge stocks. Many studies systematically fail to recognize the many years of investment and effort typically required to create a new technology and bring it to market, and the subsequent years as the technology is diffused and adopted. Consequential distortions in the measures and economic understanding are implied.
    Keywords: Agricultural Finance, Industrial Organization, Production Economics, Research and Development/Tech Change/Emerging Technologies
    Date: 2022–12
  5. By: Francesco Lamperti; Andrea Roventini
    Abstract: Though climate physical and transition risks will likely affect socio-economic dynamics along any transition pathways, their unfolding is still poorly understood. This also affects the development of climate-change policies to achieve sustainable growth. In this paper, we discuss a series of results assessing the materiality of climate risks for economic and financial stability and alternative policy pathways by means of the Dystopian Schumpeter meeting Keynes (DSK) agent-based integrated assessment model. Our results suggest the emergence of tipping points wherein physical risks under unmitigated emissions will reduce long-run growth and spur financial and economic instability. Moreover, diverse types of climate shocks have a different impact on economic dynamics and on the chances of observing a transition to carbonless growth. While these results call for immediate and ambitious interventions, appropriate mitigation policies need to be designed. Our results show that carbon taxation is not the most suitable tool to achieve zero-emission growth given its huge economic costs. On the contrary, command-and-control regulation and innovation policies to foster green investments is the best policy mix to put the economy on a green growth pathway. Overall, our results contradict the standard tenets of cost-benefit climate economics and suggest the absence of any trade-off between decarbonization and growth.
    Keywords: climate policy; climate risks; macroeconomic dynamics; agent-based modelling.
    Date: 2022–12–30

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