What drives innovation? How does it contribute to the growth of firms, industries, and economies? And do intellectual property rights help or hurt innovation and growth? Uniquely combining microeconomics, macroeconomics, and theory with empirical analysis drawn from the United States and Europe, this book introduces graduate students and advanced undergraduates to the complex process of innovation. By addressing all the major dimensions of innovation in a single text, Christine Greenhalgh and Mark Rogers are able to show how outcomes at the microlevel feed through to the macro-outcomes that in turn determine personal incomes and job opportunities. In four sections, this textbook comprehensively addresses the nature of innovation and intellectual property, the microeconomics and macroeconomics of innovation, and economic policy at the firm and macroeconomic levels. Among the topics fully explored are the role of intellectual property in creating incentives to innovate; the social returns of innovation; the creation and destruction of jobs by innovation; whether more or fewer intellectual property rights would give firms better incentives to innovate; and, the contentious issues surrounding international treaties on intellectual property. Clearly organized and highly readable, the book is designed to be accessible to readers without advanced economics backgrounds. Most technical materials appear in boxed inserts and appendixes, and numerous graphs and tables elucidate abstract concepts. This title provides a comprehensive overview of the economic causes and effects of innovation. It covers microeconomics, macroeconomics, theoretical and empirical analysis, and policy. It includes up-to-date coverage of trends and policy in intellectual property and research and development. It features mathematics appendix and keywords and questions to assist learning and teaching. Lecture slides and outlines of answers to discussion questions are available online.
Preface xi References xvi PART I: The Nature of Innovation 1 Chapter 1: The Nature and Importance of Innovation 3 1.1 Introduction 3 1.2 What Is Innovation? 4 1.3 The Microeconomic Effects of Innovation 9 1.4 Interaction between Producers and Users of Innovation 16 1.5 Innovations and Market Failure 17 1.6 Restoring Incentives to Invent and Innovate 23 1.7 Firms Competing through Innovation 28 1.8 Conclusion 29 References 30 Chapter 2: The Nature and Role of Intellectual Property 32 2.1 Introduction 32 2.2 Why Are Intellectual Property Rights Awarded? 32 2.3 Patents 34 2.4 Trademarks 39 2.5 Designs and Utility Models 43 2.6 Copyright 45 2.7 Further Questions about IPRs 49 2.8 Conclusions 53 References 55 Chapter 3: The Measurement of Innovation, Productivity, and Growth 57 3.1 Introduction 57 3.2 How Can Innovation Be Measured? 58 3.3 Illustrations of Innovation Statistics 64 3.4 Productivity at the Firm, Industry, and Economy Level 70 3.5 Comparing Productivity and Growth across Countries 74 3.6 Conclusion 80 References 82 PART II: The National Innovation System 85 Chapter 4: The National Innovation System 87 4.1 Introduction 87 4.2 The National Innovation System 87 4.3 The Central Role of R&D 88 4.4 The Government-University Axis 92 4.5 The University-Business Axis 95 4.6 The Government-Business Axis 103 4.7 National Innovation Systems in Emerging Markets 106 4.8 Conclusions 110 References 112 Chapter 5: Innovative Firms and Markets 116 5.1 Introduction 116 5.2 Entrepreneurship and New Firms 116 5.3 Innovation and Firms 119 5.4 Markets and Innovation 121 5.5 Empirical Evidence on the Returns to Innovation 132 5.6 Evidence on Interactions between Competition and Innovation 140 5.7 Conclusions 142 References 145 Chapter 6: Intellectual Property Rights and Firms 149 6.1 Introduction 149 6.2 How Can Firms Benefit from IPRs? 150 6.3 Exploring the Returns to IPRs 152 6.4 Markets for IPRs 157 6.5 Costs of Obtaining and Enforcing IPRs 160 6.6 IPR Strategies 162 6.7 Empirical Studies on the Value of IPRs 164 6.8 Conclusions 171 References 173 Chapter 7: Diffusion and Social Returns 177 7.1 Introduction 177 7.2 Modeling the Rate of Adoption of an Innovation 179 7.3 Statistical Evidence on Rates of Adoption 186 7.4 Spillovers and Social Returns to Innovation 190 7.5 Empirical Studies of Social Returns 199 7.6 Spatial Dimensions of Spillovers 204 7.7 Conclusions 205 References 207 PART III: The Macroeconomics of Innovation 211 Chapter 8: Models of Economic Growth 213 8.1 Introduction 213 8.2 The Neoclassical Growth Model 215 8.3 Endogenous Growth Models 225 8.4 Evolutionary and Other Models 237 8.5 Conclusions 239 References 241 Chapter 9: Innovation and Globalization 243 9.1 What Is Globalization? 243 9.2 World Trade in Historical Perspective 245 9.3 Theories of Trade and Growth 246 9.4 International Knowledge and Technology Flows: Theory and Evidence 250 9.5 International Financial Flows 256 9.6 International Aspects of IPRs 260 9.7 Conclusions 263 References 266 Chapter 10: Technology, Wages, and Jobs 268 10.1 Introduction 268 10.2 Microeconomic Models of Innovation and Labor Markets 268 10.3 Innovation and Labor Markets: Evidence from Firms 275 10.4 Macroeconomic and Trade Models of Innovation and Labor Markets 280 10.5 Conclusions 289 References 291 PART IV: Economic Policy 295 Chapter 11: Microeconomic Policies to Promote Firm-Level Innovation 297 11.1 Introduction 297 11.2 Is the Intellectual Property System Working? 297 11.3 Incentive Systems for Encouraging Firm-Level R&D 313 11.4 Other Innovation Policies 317 11.5 Conclusions 323 References 325 Chapter 12: Macroeconomic Issues and Policy 329 12.1 Introduction 329 12.2 Macroeconomic Evidence on IPRs and Economic Growth 330 12.3 Trade-Related Aspects of Intellectual Property (TRIPS) 334 12.4 Intellectual
