Three essays on the economics of innovation

Harun Bulut ()

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: We have identified three specific problems in the economics of innovation and addressed each of them in separate essays in this thesis.;Essay 1 revisits the problem of inefficient diversification efforts of firms in a R&D race setting (Dasgupta and Maskin, 1987)1 by taking into account the fact that firms have the option of trade secrecy in addition to patents in protecting their inventions. This essay is theoretical in nature as we use a game-theoretic modeling of firms' project and IP choices in a R&D race. We find that the availability of multiple IPR protection instruments can move the paths chosen by firms engaged in a R&D race towards the social optimum.;Essay 2 refers to the adoption and diffusion stages of the innovation process as we look at the economic effects of the introduction of Genetically Modified (GM) food in the European Union (EU) agricultural and food system. We develop a partial equilibrium modeling of European agro food sector and calibrate the model's parameters by using the EU data in year 2000. We find that the introduction of GM food is reducing overall welfare but the producers of quality-enhanced products become better off, a result that is robust to variations in the values of critical parameters.;Essay 3 empirically studies a basic, yet somewhat unexplored, question of whether U.S. universities in expectation, are earning economic rent (profit) from licensing activities. The data include 148 observations from U.S. universities over the five years time period 1998 to 2002 and are mostly from AUTM (Association of the University Technology Managers) surveys and various other sources. Based on a structural econometric model of licensing rents of U.S. universities, we obtain the "marginal rate of return" from research dollars as nearly 1% and identify the key determinant of license rent generation as the quality of faculty (which is measured by the citations received in technology departments), together with the size of the university in terms of total research expenditures.;1 Dasgupta, P., and E. Maskin. 1987. "The Simple Economics of Research Portfolios." Economic Journal 97: 581-95.

Date: 2005-01-01
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