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The Economics of Innovation (ECO-AD-INNOVATIO)

ECO-AD-INNOVATIO

Description

The main intention of this course is to deliver students with a working knowledge of research in this area by studying some of the canonical work, both empirical and theoretical, and then exploring some frontier work. After discussing some general background, we’ll focus in on three topics: the relationship between competition and innovation, the role and measurement of knowledge spillovers, and the impact of patent policy on innovation.

The goal is to provide students both the basis on which to identify some of the important research questions as well as an understanding of the techniques that could be employed to address them. You might notice a lot of papers in top journals in recent years; the topics covered here are very popular in the literature right now.

The papers listed below are a sample. We will not cover all of them, and we may cover some things that arise that aren’t on the list yet.

Assessment:
There will be a short problem set to cover some of the basic background material (worth 20% of the final grade). In addition, each student will do an in-class presentation of a paper (this could be with one of the papers on the reading list or one chosen in consultation with me) Prior to the presentation, the student will be required to submit both a report of the paper and a slide deck for the presentation. The report will be worth 20% of the final grade and the slide deck and presentation will be worth 20%. Finally, each student will develop and submit a research proposal. The proposal will compromise 40% of the final grade and must include an introduction highlighting the research question and why it is interesting, a literature review, and a discussion of modelling possibilities and testing.

 

Module structure:

WEEK 1/2

Introduction: Some Classic Economics of Innovation Arrow, K. J. (1972). Economic Welfare and the Allocation of Resources for Invention. In Readings in Industrial Economics (pp. 219–236). https://www.nber.org/system/files/chapters/c2144/c2144.pdf

Nordhaus, William D. “An Economic Theory of Technological Change.” The American Economic Review, vol. 59, no. 2, 1969, pp. 18–28. JSTOR, http://www.jstor.org/stable/1823649.

Jones, Benjamin F. and Summers, Lawrence H.. "A Calculation of the Social Returns to Innovation". Innovation and Public Policy, Chicago: University of Chicago Press, 2021, pp. 13-60. https://www.degruyter.com/document/doi/10.7208/chicago/9780226805597-005/html?lang=en

Grossman, Gene M., and Elhanan Helpman. "Quality ladders in the theory of growth." The Review of Economic Studies 58.1 (1991): 43-61. https://doi.org/10.2307/2298044

Klette, T. J., & Kortum, S. (2004). “Innovating Firms and Aggregate Innovation.” Journal of Political Economy, 112(5), 986–1018. https://doi.org/10.1086/422563

WEEK 3/4

What is the relationship between competition and innovation? (Empirics)

Aghion, P., N. Bloom, R. Blundell, R. Griffith, P. Howitt 2005. “Competition and Innovation: An Inverted U-Relationship.” Quarterly Journal of Economics 120(2): 701-728. https://doi.org/10.1093/qje/120.2.701

Igami, M. (2015). “Estimating the Innovator’s Dilemma¿: Structural Analysis of Creative Destruction.” Journal of Political Economy, 1–66. https://doi.org/10.2139/ssrn.1733174

Ronald L. Goettler and Brett R. Gordon “Does AMD Spur Intel to Innovate More?” Journal of Political Economy 2011 119:6, 1141-1200 https://doi.org/10.1086/664615

Colleen Cunningham, Florian Ederer, and Song Ma. “Killer Acquisitions” Journal of Political Economy 2021 129:3, 649-702 https://doi.org/10.1086/712506

WEEK 5

What is the relationship between competition and innovation? (Models) Aghion, P., N. Bloom, R. Blundell, R. Griffith, P. Howitt 2005. “Competition and Innovation: An Inverted U-Relationship.” Quarterly Journal of Economics 120(2): 701-728. https://doi.org/10.1093/qje/120.2.701

Ufuk Akcigit and William R. Kerr, “Growth through Heterogeneous Innovations”

https://www.journals.uchicago.edu/doi/10.1086/697901

Liu, E., Mian, A. and Sufi, A. (2022), “Low Interest Rates, Market Power, and Productivity Growth. Econometrica, 90: 193-221. https://doi.org/10.3982/ECTA17408

Letina, I. (2016), “The road not taken: competition and the R&D portfolio.” The RAND Journal of Economics, 47: 433-460. https://doi.org/10.1111/1756-2171.12133

WEEK 6

Knowledge Spillovers: Theory Franco, A.M. and Filson, D. (2006), “Spin-outs: knowledge diffusion through employee mobility.” The RAND Journal of Economics, 37: 841-860. https://doi.org/10.1111/j.1756-2171.2006.tb00060.x

Christoph Carnehl, Johannes Schneider, “A Quest for Knowledge”, https://arxiv.org/abs/2102.13434

WEEK 7

Knowledge Spillovers: Evidence Bloom, N., Schankerman, M. and Van Reenen, J. (2013), “Identifying Technology Spillovers and Product Market Rivalry.” Econometrica, 81: 1347-1393. https://doi.org/10.3982/ECTA9466

Paolo Zacchia, “Knowledge Spillovers through Networks of Scientists,” The Review of Economic Studies, Volume 87, Issue 4, July 2020, Pages 1989–2018, https://doi.org/10.1093/restud/rdz033

Myers, Kyle R., and Lauren Lanahan. 2022. "Estimating Spillovers from Publicly Funded R&D: Evidence from the US Department of Energy." American Economic Review, 112 (7): 2393-2423. https://doi.org/10.1257/aer.20210678

WEEK 8

Patent Policy and Innovation Williams, H. “Intellectual Property Rights and Innovation: Evidence from the Human Genome.” 2013, Journal of Political Economy 121:1, 1-27. https://doi.org/10.1086/669706

Alberto Galasso and Mark Schankerman, “Patents and Cumulative Innovation: Causal Evidence from the Courts,” The Quarterly Journal of Economics (2015) 130 (1): 317-369. https://doi.org/10.1093/qje/qju029

Tommaso Alba “Where is the merit? Dynamic games of litigation under asymmetric

Information” working paper, University of Toronto

William Matcham and Mark Schankerman “Screening Property Rights for Innovation” https://willmatcham.com/img/ms_2023_10_17_main_text.pdf

Ganglmair, Bernhard and Reimers, Imke, “Visibility of Technology and Cumulative Innovation: Evidence from Trade Secrets Laws” (February 8, 2022). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3393510

 

ENROL FOR THIS COURSE