In Lentz and Mortensen (2005), we formulate and estimate a market equilibrium model of endogenous growth through product innovation in the spirit of Klette and Kortum (2004). In this paper, we provide a quantitative solution to the social planner’s problem in the modeled environment. We find that the optimal growth rate is over three times larger than its value in market equilibrium and that th...

The effects of public policy programs which aim at internalizing spill-overs due to successful innovation are analyzed in a sequential double-sided moral hazard doublesided adverse selection framework. The central focus lies in analyzing their impact on contract design. We show that in our framework only ex post grants are a robust instrument for implementing the first-best situation, whereas t...

In this note, a wide range of innovation indicators are analyzed in order to describe the innovation behavior of manufacturing firms in the Latin American and Caribbean (LAC) region using the recently released Enterprise Surveys 2010. The Enterprise Surveys define innovation rates as the share of firms introducing product and process innovations. The survey also measures the proportion of firms...

Recent Internet technologies and web-based applications, such as social software, are being increasingly applied in firms. Social software can be employed for knowledge management and for external communication enabling access to internal and external knowledge. Knowledge in turn constitutes one of the main inputs to service innovation. Hence, social software has the potential to support servic...

The Link between R&D, Innovation and Productivity: Are Micro Firms Different?* We analyze the link between R&D, innovation, and productivity in MSMEs with a special focus on micro firms with fewer than 10 employees; usually constituting the majority of firms in industrialized economies. Using the German KfW SME panel, we examine to what extent micro firms are different from other firms in terms...

This paper investigates several key challenges faced by oil-rich countries regarding their economic growth and development. First, it discusses how to determine currency overvaluation for these (if any). To the overvaluation, real exchange rate (RER) is calculated Balassa–Samuelson effect estimated via a regression model. Next, study presents an empirical model assessing impact of oil rent on i...

In this note, a wide range of innovation indicators are analysed in order to describe the innovation behaviour of manufacturing firms in LAC using the recently released Enterprise Surveys 2010. The Enterprise Surveys define innovation rates as the share of firms introducing product and process innovations. The survey also measures the proportion of firms investing in research and development (R...

The patent is supposed to be a means to an end, that end being innovation. Whether the innovation comes from the protection the patent affords the inventor, or from the dissemination of the information of invention the patent allows, the patent is not meant to be an end in itself. This seems to be changing, the patent acquiring a strategic value increasingly independent of innovation. If this d...

The main objective of this article is to show how the Austrian School Economics, based on solid theoretical principles, anticipated, through its exponents, innovation processes, that we are currently experiencing, would develop. clear identification current phenomena with “Austrian” doctrine greatest evidence full validity these ideas. We will show, in a non-exhaustive way, application day-to-d...

This study explores the effects of patent protection in a distance-to-frontier R&D-based growth model with financial frictions. We find that whether stronger patent protection stimulates or stifles innovation depends on credit constraints faced by R&D entrepreneurs. When credit constraints are non-binding (binding), strengthening patent protection stimulates (stifles) R&D. The overall effect of...