nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2014‒10‒22
five papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Innovation, Technological Interdependence, and Economic Growth By Douglas Hanley
  2. The Technological Resilience of U.S. Cities By Pierre-Alexandre Balland, David Rigby & Ron Boschma; David Rigby; Ron Boschma
  3. Strategic collective system building by firms who launch sustainability innovations By Planko; Jacqueline Cramer; Maryse Chappin; Marko Hekkert
  4. Technological diversification in China: Based on Chinese patent analysis during 1986-2011 By Lutao Ning; Martha Prevezer; Yuandi Wang
  5. Back to Basics: Basic Research Spillovers, Innovation Policy and Growth By Douglas Hanley; Ufuk Akcigit; Nicolas Serrano-Velarde

  1. By: Douglas Hanley
    Abstract: There is substantial heterogeneity across industries in the level of interdependence between new and old technologies. I propose a measure of this interdependence—an index of sequentiality in innovation—which is the transfer rate of patents in a particular industry. I find that highly sequential industries have higher profitability, higher variance of firm growth, lower exit rates, and lower rates of patent expiry. To better understand these trends, I construct a model of firm dynamics where the productivity of firms evolves endogenously through innovations. New innovators either replace existing technologies or must purchase the rights to existing technologies from incumbents in order to produce, depending on the level of sequentiality in the industry. Estimating the model using data on US firms and recent data on US patent transfers, I can account for a large fraction of the cross-industry trends described above. Because innovation results in larger monopoly distortions in more sequential industries, there is an overinvestment of research inputs into these industries. This misallocation, which amounts to 2.5% in consumption equivalent terms, can be partially remedied using a patent policy featuring weaker protection in more sequential industries, producing welfare gains of 1.7%.
    Keywords: Innovation, firm dynamics, technological change, optimal policy
    JEL: L11 O31 O33 O34 O38
    Date: 2014–01
  2. By: Pierre-Alexandre Balland, David Rigby & Ron Boschma; David Rigby; Ron Boschma
    Abstract: We study the resilience of cities by analyzing their relative capacity to sustain the production of technological knowledge in the face of adverse events. Using patent applications in 366 Metropolitan Statistical Areas in the United States from 1975 to 2002, we analyze the vulnerability and response of cities to technological crises. We define episodes of technological crisis as periods of sustained negative growth in patenting activity. We find that the frequency, intensity and duration of technological crises vary considerably across American cities. We test whether the technological knowledge bases of cities, their network openness and institutional environment condition their resilience to technological crises. Econometric analysis suggests that cities with knowledge bases that are diverse, flexible and that have a high degree of relatedness to technologies in which they do not currently possess comparative advantage tend to avoid technological crises, have limited downturns in patent production and faster recovery.
    Keywords: urban resilience, technological crisis, related knowledge structure, institutions, inter-city networks
    JEL: O33 R11 L65 D83
    Date: 2014–10
  3. By: Planko; Jacqueline Cramer; Maryse Chappin; Marko Hekkert
    Abstract: The implementation of innovative sustainability technologies often requires far reaching changes of the macro environment in which the innovating firms operate. Strategic management literature describes that firms who want to commercialize an innovative technology can collaborate in networks or industry clusters to build up a favourable environment for their technology. This increases the chances of successful diffusion and adoption of the technology in society. However, the strategic management literature does not offer advice on how to strategically build up this supportive external environment. We fill this gap with complementary insights from the technological innovation systems literature. We introduce the concept of strategic collective system building. Collective system building describes processes and activities networks of actors can strategically engage in to collectively build up a favourable environment for their innovative sustainability technology. Furthermore, we develop a strategy framework for collective system building. To underpin the theoretical analysis empirically, we conducted a case study in the Dutch smart grids field. The resulting strategy framework consists of four key areas for strategy making: technology development and optimization, market creation, socio-cultural changes and coordination. Each of these key strategic areas is composed of a set of system building activities.
    Keywords: System building; technological innovation systems; strategic collaboration; collective strategy; sustainability innovation
    Date: 2014–09
  4. By: Lutao Ning; Martha Prevezer; Yuandi Wang
    Abstract: This paper confirms the positive relationship between national technological size and technological diversification (following Cantwell, Vertova 2004 for major developed economies) for China over three periods: from its premarket status 1986-1990, through its rapid marketization of 1991-2000, to its globalization phase from 2001-2011. The Chinese technological trajectory differs from the earlier developed world model significantly in tending to greater technological specialization from the outset of technological growth in the 1990s. We analyse a dataset of 3.7 million Chinese patents at the SIPO, Chinese patent office. Using shift-share analysis, we decompose changes in the relationship between technological size and diversification into those attributable to the increase in size (number of patents, population, GDP) and those attributable to the structural shift towards diversification or specialization between technological fields. We find that although the positive relation between size and diversification holds over all three periods, there is a structural shift between each period towards greater technological specialization. We argue that this mirrors the ‘globalizing’ FDI-driven shift that occurred in the US towards technological specialization between 1965 and 1990 (Cantwell and Vertova 2004). In China this represents a shift away from traditional fields such as consumer goods and equipment or transportation towards electronics and computing fields.
    Keywords: technological diversification and specialization; patents; China; R&D investment structure; size-diversification relationship
    JEL: O1 O3 O5 P5
    Date: 2014–09
  5. By: Douglas Hanley; Ufuk Akcigit; Nicolas Serrano-Velarde
    Abstract: This paper introduces a model of endogenous growth through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a general equilibrium framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that standard R&D policies can accentuate the dynamic misallocation in the economy. We also find a strong complementarity between the property rights of basic research and the optimal funding of public research.
    Keywords: Innovation, basic research, applied research, research and development, govern- ment spending, endogenous growth, spillover
    JEL: O31 O38 O40 L78
    Date: 2014–01

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