8 - innovation, information and networked economy

Question 1

what is a challenge to public policy?

Answer 1

making the mots of human creativity and inventiveness

Question 2

what is the process of innovation influenced by?

Answer 2

state of knowledge, individual creativity, public policy, economic institutions and social norms

which make up the innovation system

Question 3

when institutions of the capitalist economy work properly what should happen?

Answer 3

successful innovators gain innovation tents, eventually competed away by imitators

Question 4

what does economies of scale and means of delaying imitation mean?

Answer 4

that knowledge producing firms are at least temporary monopolists and can profit form winner take all competition by setting prices about marginal costs of production

Question 5

what is the patent system?

Answer 5

means of delaying imitation

gives companies a time limited monopoly and allows company to charge a higher price

Question 6

why might companies invest in risky research and development?

Answer 6

due to patented research you can charge a higher price and therefore incentivised due to high profits

Question 7

how is innovation a system?

Answer 7

it connects networks of users, private firms, indidivudals and government bodies

Question 8

how is innovation a process?

Answer 8

it is a fundemantcal source of change in our life that itself is constantly undergoing change

Question 9

what is meant by invention?

Answer 9

the development of new methods of production and new products

Question 10

what is diffusion?

Answer 10

the spread of the invention throughout the economy

Question 11

what is process innovation?§

Answer 11

produce a good or service at a lower cost than its competitors

how you get things done

Question 12

what is product innovation?

Answer 12

produce a new good at a cost that will attract buyers

doing something new

Question 13

what are the terms that are used to mean inevntion?

Answer 13

radical and incremental innovation

Question 14

what is radical innovation?

Answer 14

blows up the existing systems or process and replaces t with something entirely new

e.g. walk man vs iPods

Question 15

what is incremental innovations/

Answer 15

series of small improvements made
focuses on improving an existing products development

e.g. the improvement on the filaments in a lightbulb such as colours

Question 16

why might companies way to copy others?

Answer 16

due to the prospect of innovation rents

Question 17

why might late comers also be unwillingly be pushed towards innovation?

Answer 17

if they donate adopt then usually will go bankrupt as more people will move to companies in which have the innovation

Question 18

when did the process of capitalist innovation start?

Answer 18

england 1750 with key technologies introduced in textiles, energy and transportation

Question 19

what are general purpose technologies?

Answer 19

important technologies such as engines, electricity and transportation

explains why innovation didn’t end with the industrial revolution

Question 20

what are some of the players in the innovation system?

Answer 20

givenremnt, educational institutions and firms

Question 21

what is the difference between codified and tactic knowledge?

Answer 21

C - written down, coded in some way such as writing a recipe for a cake

T - something you can’t write down,

Question 22

what is silicone valley famous for?

Answer 22

being a place with high growth in computer innovation

also become associated with an innovation system

Question 23

what is venture capital?

Answer 23

financing that investors provide to startup companies that are believed to have long term growth potential

Question 24

what are examples in which different types of innovation systems are used?

Answer 24

US - radical, labour can move easily between firms

Germany - Incremental, ties of workers to firms are stronger, finance comes from retaind profits and banks rather than venture capital

Question 25

what does the silicon valley innovation system consist of?

Answer 25

entrpuenial innovation firms: firms specialising in producing new methods or startups

unis: Uni of Cal and Stanford work closely with firms to commercialise innovation

Gov:
entrepeneurs
industrial research centres: uni, gov and private

venture capital funding

relationships among firms

Question 26

how can innovation contribute to rising living standards?

Answer 26

expanding set of products available to consumers and reducing prices of existing products

Question 27

the successful capitalist innovation systems in SV and germany have what in common?

Answer 27

• innovation system not based on individual creativity (firms relies on relationships among all actors employees, owners, govs and sources of finance)
• invisible hand and a guiding hand ( combines profit seeking competition among ind and frisk with gov intervention)

Question 28

how does germany show the essential role of the governments in innovation systems?

Answer 28

government subsided apprenticeship system, reduces training costs

Question 29

what are three aspects of invention and diffusion that make innovation process a challenge to public ploy?

Answer 29

• external effects and the problem of coordination among innovators
• public goods
• economies of scale and winner take all competition

(all among sources of market failure also, simply letting market competition regulate the process of innovation will not generally result in an efficient outcome)