INNOVATION
The Innovation Threshold
By Erik Brouwer, Tom Poot and Kees van Montfort
In this paper, we propose an economic model to analyse the sales out of new products. This model accounts for the fact that even among firms for which R&D is a permanent activity, a fraction of firms does not have sales of innovative products during a two-year observation period. We propose a model in which the fixed costs of introduction is a major concern in the decision making process. In a structural model we estimate the fixed costs of the market introduction of new products and explain subsequent sales of innovative products.
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Two Puzzles Resolved: Of the Schumpeter - Arrow Stalemate and Pharmaceutical Innovation Markets
By Michael A. Carrier
One of the most heated discussions in economics in recent years has concerned the relationship between market structure and innovation. After a half-century of debate and innumerable studies, the consensus is that there is no clear answer to the question. On a concrete level, the uncertainty underlies the most fundamental critique of "innovation markets," or markets for research and development (R&D). After all, if concentration leads to innovation, then antitrust challenges are not appropriate even for mergers that lead to monopoly.
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Understanding the Inputs into Innovation: Do Cities Substitute for Internal Firm Resources?
By Chris Forman, Avi Goldfarb and Shane M. Greenstein
We examine whether there is a tradeoff between employing internal (firm) resources and purchased external (local) resources in process innovation. We draw on a rich data set of Internet investments by 86,879 U.S. establishments to examine decisions to invest in advanced Internet technology. We show that the marginal contribution of internal resources is greater outside of a major urban area than inside one. Agglomeration is less important for firms with highly capable IT workers. When firms invest in innovative processes they act as if resources available in cities are partial substitutes for both establishment-level and firm-level internal resources.
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Commercializing University Innovations: Alternative Approaches
By Robert E. Litan, Lesa Mitchell and E.J. Reedy
For much of the past century, universities and university-based researchers have played a critical role in driving technological progress, from the fortification of Vitamin D in the 1920s to the creation of Google in the 1990s. In the process, universities have been a strong catalyst for U.S. economic growth. But a perennial challenge related to university-driven innovation has been ensuring that university structures help – not hinder – innovation and the commercialization of innovations. Multiple pathways for university transfer exist and can be codified to provide broader access to innovation, allow a greater volume of deal flow, support standardization, and decrease the redundancy of innovation and the cycle time for commercialization. The proposed changes focus on creating incentives that will maximize social benefit from the existing investments being made in R&D and commercialization on university campuses.
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The Prerequisites for Technology Innovation
By Avi Messica and Tamir Agmon
This report discusses the prerequisites for growth through the formation or the strengthening of innovative high technology sector, especially in small to medium size countries. It is based on analysis of the Israeli Hi-Tech experience over the past fifteen years and by interviews with local industry professionals and entrepreneurs as well as variety of data sources. Emphasis was put on strategic aspects and system level considerations for public policy makers.
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Innovation, Imitation and Entrepreneurship
By Grace Yong, and Kong Weng Ho
This paper analyzes the gradual shift in the technological paradigm of an economy as it approaches the world technology frontier. The model developed in this paper consists of firms which employ skilled workers as an important input in technological advancement, but the novel feature here is the entrepreneur, who is the brain of technological progress. The entrepreneur has to decide to undertake either imitative or innovative activities, of which decision both affects and is affected by the country's distance to frontier. Specifically, the entrepreneur needs to have a minimum ability threshold level in order to carry out innovation.
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