Global Innovation Contests

Elias Dinopoulos (), Constantinos Syropoulos () and Theofanis Tsoulouhas
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Elias Dinopoulos: Department of Economics University of Florida

No 2023-3, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: This paper develops a two-country, dynamic, general-equilibrium model with innovation contests to study the impact of globalization on the skill premium and fully endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D to discover new products while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country’s relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country’s long-run growth.

Keywords: Innovation contests; economic growth; scale effects; R&D; rent-protection activities; barriers to innovation; wage premium (search for similar items in EconPapers)
JEL-codes: F10 F30 F40 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2023-01-12
New Economics Papers: this item is included in nep-int and nep-tid
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:drxlwp:2023_003

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