week 6 Flashcards

1
Q

innovation

A

must be introduced into the market so that consumers or other firms can benefit

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2
Q

innovation-led growth

A

lead economists and policy makers to focus on the importance of investments in technology and knowledge production

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3
Q

invention

A

enhances the stock of knowledge, but it does not instantaneously arrive in the market

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4
Q

product innovation

A

the introduction of a new product, or a significant qualitative change in an existing product
- New market

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5
Q

process innovation

A

the introduction of a new process for delivering existing goods and services
- Delivering more output using the same amount of input

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6
Q

problem of matching incentives to the value of the activity

A

If the innovator cannot charge all the beneficiaries of its innovation

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7
Q

possible market failure

A

the market system, guided by the independent actions of private firms, will not lead to the optimal amount of innovations

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8
Q

three main reasons for market failure

A

knowledge, innovation, cost

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9
Q

knowledge

A

ideas are goods with peculiar characteristics that make them very similar to public goods

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10
Q

non-rival knowledge

A

the use of existing knowledge by one person does not preclude use by any other and does not cost additional resources

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11
Q

non-excludable knowledge

A

the key issue is how easily knowledge can be accessed

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12
Q

free good

A

Since the marginal cost of using knowledge is zero, maximum efficiency in its use implies no restriction to access

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13
Q

non-rival good dilemma

A

only the anticipation of a positive price will guarantee the resources for creation of knowledge, but a positive price lead to under-consumption

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14
Q

free-riding

A

those who benefit from the goods have an incentive to avoid paying

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15
Q

market failure in knowledge

A

less resources in the production of new knowledge, less knowledge than what would be optimal from the social point of view

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16
Q

positive externalities

A
  • if the production possibilities of one firm are positively influenced by the choices of another firm
  • The innovation first introduced in the market by the innovator, benefits other firms without any monetary reward for the innovator
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17
Q

leaking out applied knowledge embedded in innovation

A
  • Movement of personnel from one firm to another (learning by hiring)
  • Informal communications networks among engineers and scientists
  • Professional meetings at which information is exchanged
  • Inputs from suppliers and customers
  • Reverse engineering
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18
Q

social benefits of an innovation

A

take into account the value of all the positive externalities

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19
Q

indivisibility

A

R&D projects cannot be broken down into smaller, more manageable units

20
Q

uncertainty

A

R&D projects have a very low success probability

21
Q

intrinsic

A

belonging to the essential nature or constitution of a thing

22
Q

three different types of innovation or technology policy

A

institution & regulation, support, direct involvement

23
Q

increasing expenditures in formal R&D

A

the private sector, higher education government

24
Q

R&D target UN SDG (sustainable development goals, 2015)

A

rise R&D expenditure as a proportion of GDP and researchers (in full-time equivalent) per million inhabitants

25
R&D target EU's Lisbon Agenda (2000) and Europe 2020 strategy (2010)
3% of Gross Domestic Product (public and private combined)
26
R&D target Netherlands
2.5% of GDP
27
intellectual property rights, R&D subsidies and tax credits
indirect, stimulate private investment in R&D
28
research grants
indirect, support basic research and knowledge production
29
government R&D
direct, basic research and knowledge production
30
pre-commercial procurement
direct, stimulate private investment in R&D
31
standards and regulation
indirect, improve framework, enhance demand
32
under-provision of innovation
re-assignement of property rights
33
patent
a document, issued upon application by a government office, which describes an invention and creates a legal situation in which the invention can only be exploited with the authorization of the owner
34
term of patent
generally 20 years
35
markup over marginal cost
depends on price elasticity of demand and strength of the patent
36
monopoly pricing
patent provided very stron protection
37
incentive to innovate
Allocating strong property rights on knowledge and innovation
38
life of the patent
for how many years should the monopoly last? - Stipulated by law
39
breadth of the patent
how different another product must be in order not to infringe? - Under the control of the patent offices and courts
40
short and narrow patent
not provided enough incentive to invent
41
long and costly patent
too costly for the society
42
optimal solution for patent design
a longer protection that allows for limited competition, or a hard monopoly (broad patent) for a shorter time
43
nordhaus model
showed that an optimal patent must be of finite duration but strictly positive
44
gallini model
showed that broad and short patent are optima
45
maurer and scotchmer model
showed that a narrow but long patent is preferable
46
strategic patenting
a practice when patent applications are prosecuted with the goal of improving a portfolio's patent position in a defined technological area
47
the optimal solution of patent protection depends on
the characteristics of the industry, demand conditions in a given market