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A - Economics spring > Innovation, Information and the networked economy > Flashcards

Innovation, Information and the networked economy Flashcards

1
Q

how is the process of innovation influenced?

A

by the state of knowledge, individual creativity, public policy, economic institutions and social norms that jointly makeup an innovation system

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2
Q

what do innovators gain?

A

when capitalist economy working properly they gain economic rents which are lost by imitators

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3
Q

what is an innovation system?

A

connects networks of users, private firms, individuals, an governed bodies

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4
Q

what is innovation as a process?

A

fundamental source of change in our life that itself is constantly undergoing change

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5
Q

what is the descriptive analysis/

A
  • why does innovation matter?
  • why does innovation arise?
  • how much innovation?
  • how to promote innovation?
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6
Q

how can public policy be used?

A

designed so that innovations occur more quickly

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7
Q

what is radical innovation?

A

inventing new things such as filament lighting

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8
Q

what is incremental innovation?

A

improves an existing product

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9
Q

what elements are included in successful.l innovation system?

A
  • relationships among private firms, gov, educational institutions, individual scientists
  • social interactions are governed by combination of laws, policies, knowledge and social norms
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10
Q

what is diffusion?

A

spread of innovation throughout economy

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11
Q

what is innovation?

A

the invention and diffusion of new products or production methods

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12
Q

what are the types of innovation?

A
  • process vs product

- radical vs incremental

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13
Q

what is process innovation?

A

change in implementation of new improved procession or delivery method

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14
Q

what is a public good?

A

non exclusive and non rival such as knowledge

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15
Q

what is intellectual property?

IP

A

creations of the intellect for which a monopoly is assigned to designated owners by law

to protect intellectual property it is protected by some kind of rights

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16
Q

consequences of innovation in production?

A
  • shift from goods manufacturing in to services provision (industrial structure has shifted from goods to services because innovation has changed way we are producing things, more manufacturing the more services are need for provision)
  • shift from home production to market production
  • a shift from human to robots (destcrutive creation)
  • productivity growth and economic growth

focus on product and process

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17
Q

what are the consequences of innovation in distribution?

A
  • inequality across sectors: manufacturing to service
  • inequality across genders
  • inequality across skilled / unskilled orders
  • inequality across generations
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18
Q

what is a complement innovation?

A

value of innovation depends on the presence of the other

e.g. app and iPhones

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19
Q

what is a substitute innovation?

A

two innovations are valuable alone, but less valuable when some other innovation has already occurred

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20
Q

what is tertiary sector?

A

services provision

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21
Q

why are average workers the losers?

A

they are usually the ones affected by innovation as new technologies allow machines to do routine work

22
Q

what are the short run effect of using robots?

A
  • labour replacing: worker endowments reduced by technology

- labour enhancing: machines and humans can be complements so endowments enhanced

23
Q

what are the long run effect of using robots?

A
  • increase in profits
  • displace labour: workers go into unemployment
  • creates additional employment in other services
  • upgrade enfdowmenets
24
Q

why has inequity of genders been affected?

A

due to innovation women are now able to have same opportunities

25
Q

what is tactic knowledge ?

A

kind of knowledge tat is difficult to transfer to another person by means o writing it down

26
Q

what is codified or explicit knowledge?

A

can be readily articulated, codified, stored and accessed

easily transmitted by others

27
Q

why network and intervention are essential for both systems?

A
  • external effects: coordination failure between innovators
  • public goods: economies of scale: network effect
  • search matching: asymmetric information
28
Q

what is the network effect?

A

phenomenon whereby increased numbers of people or pets improve the value of a good or service, e.g. internet

29
Q

why should the government intervene?

A

to encourante innovations

30
Q

what is a matching market?

A
  • matches two distinct groups of people

- each person in market would generally benefit from being connected to the right member of the other group

31
Q

what is a n example of how the matching market works?

A
  • likedin
  • eBay

links two parties that may have not been otherwise

32
Q

how does the value of forms of knowledge increase?

A

when more people use it, the benefit to users increase as the network of users grows

33
Q

what is a lock in?

A

example of winner takes all

market gets stuck with standard of technology that may not be the best but makes becomes dependant on it

as the network grows y0ou get a lock in

part of the demand side of winner takes all

34
Q

what is the importance f matching markets in economics?

A

the magnitude of network connections now makes these markets possible

35
Q

what is the network effect?

A

The network effect is a phenomenon whereby increased numbers of people or participants improve the value of a good or service.

36
Q

what is a strategy to stop market failure in matching markets?

A

companies to charge low r zero costs

such as adobe, people read it for free so incentivises the company to pay for adobe

37
Q

what can public policies do?

A

encourage useful innovations and accelerate diffusion to lall users who may benefit

38
Q

what are the two types of policies looked at?

A
  • intellectual policy rights

- subsiding the supply of inputs to the innovation and diffusion process

39
Q

what are intellectual property rights?

A

A right that is had by a person or by a company to have exclusive rights to use its own plans, ideas, or other intangible assets without the worry of competition, at least for a specific period of time. These rights can include copyrights, patents, trademarks, and trade secrets.

40
Q

what is an example of a trade secret?

A

coco cola recipe 100 years

41
Q

why might secrecy and barriers as a policy not be effect8ive?

A

firms my invent the same product indeendnatly or reverse engineer

42
Q

how do intellectual property rights work?

A

novel idea must be codifiable and non excludable

43
Q

what is the economic problem with patents?

A

how best tp balance the competing objectives of making good use of existing knowledge, ,devoting sufficient eoncomic resources and creativity to creating new knowledge and diffusing new knowledge

44
Q

what is an optimal patent?

A

one that best advances the use of knowledge in the economy

45
Q

how do you work out total benefits of innovation to society?

A

probability of innovation x benefits to others

46
Q

what happens if the duration of patent increases?

A

probability of innovation increases but inly to a certain length and it will decline as long term patents will prevent other potential innovators from using protected knowledge to develop an idea

47
Q

what is another important role in innovation systems?

A

the role of the government

48
Q

hw can competitions and prizes help innovation?

A

policy for support
award a price for the successful development of solution to a problem that will meet some specifications

prize winner awarded cost of development rather than with monopoly and innovation goes straight into public domain

49
Q

what is an example of comp and prize policy?

A

Deepwater horizon oil rig disaster

Prize foundation offered one mil to any team wh could significantly import current tech for the cleanup

50
Q

how can public policies help innovation?

A
  • increase pace of innovation
  • influence the direction of innovation
  • address the consequences of innovation
51
Q

what are the consequences of innovation?

A
  • shift from goods manufacturing to services
  • series produced in the market
  • rise in robots
  • productivity growth slows
52
Q

why does innovation have unequal effects?

A

affects people differently, depending on whether their skills nd other endowments could be replicated bu machines or whether machines make endowments more valuable

A - Economics spring (9 decks)

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