Legal Institutions, Innovation and Growth

Luca Anderlini, Leonardo Felli, Giovanni Immordino and Alessandro Riboni

No 8433, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyze the relationship between legal institutions, innovation and growth. We compare a rigid (law set ex-ante) legal system and a flexible one (law set after observing current technology). The flexible system dominates in terms of welfare, amount of innovation and output growth at intermediate stages of technological development ? periods when legal change is needed. The rigid system is preferable at early stages of technological development, when (lack of) commitment problems are severe. For mature technologies the two legal systems are equivalent. We find that rigid legal systems may induce excessive (greater than first-best) R&D investment and output growth.

Keywords: Commitment; Flexibility; Growth; Innovation; Legal system (search for similar items in EconPapers)
JEL-codes: E61 L51 O3 O43 (search for similar items in EconPapers)
Date: 2011-06
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: LEGAL INSTITUTIONS, INNOVATION, AND GROWTH (2013)
Working Paper: Legal Institutions, Innovation and Growth (2011)
Working Paper: Legal Institutions, Innovation and Growth (2010)
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