A New Institutional Approach to Innovation Policy

Australian Economic Review Policy Forum: Research and Innovation, Forthcoming

10 Pages Posted: 21 Jan 2016

Multiple version iconThere are 2 versions of this paper

Date Written: January 19, 2016

Abstract

Modern research and innovation policy is largely based in neoclassical welfare economics, in which the diagnosis of market failure in the production of new information is translated into a case for innovation policy. Both New Institutional and Public Choice economics criticize this approach because it tends to assume the policy interventions are largely costless, and produce only benefits. An alternative policy model is proposed that focuses on minimizing the social costs of innovation policy through efficient choice of institutions. We review the recently released National Innovation & Science Agenda through this lens.

Keywords: innovation policy, new institutional economics, institutional possibility frontier

JEL Classification: H41, O38, P50

Suggested Citation

Davidson, Sinclair and Potts, Jason, A New Institutional Approach to Innovation Policy (January 19, 2016). Australian Economic Review Policy Forum: Research and Innovation, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2718791

Sinclair Davidson

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Jason Potts (Contact Author)

RMIT University ( email )

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