Buy, Keep or Sell: Economic Growth and the Market for Ideas
51 Pages Posted: 16 Dec 2013
Date Written: December 12, 2013
An endogenous growth model is developed where each period firms invest in researching and developing new ideas. An idea increases a firm's productivity. By how much depends on how central the idea is to a firm's activity. Ideas can be bought and sold on a market for patents. A firm can sell an idea that is not relevant to its business or buy one if it fails to innovate. The developed model is matched up with stylized facts about the market for patents in the U.S. The analysis attempts to gauge how efficiency in the patent market affects growth.
Keywords: Growth, Ideas, Innovation, Misallocation, Patents, Patent Agents, Research and Development, Search frictions
JEL Classification: O31, O41
Suggested Citation: Suggested Citation