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Innovations, Patent Races and Endogenous Growth

Joseph Zeira

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); LUISS Guido Carli, DPTEA

November 2002

KSG Working Paper No. RWP02-047

This paper presents a model of innovations and economic growth, which departs from standard endogenous growth models by assuming that the set of potential projects for innovation in each period is limited. The model differs in a number of results from former endogenous growth models. First, it explains patent races, where many research teams search for the same potential innovation. Second, the rate of growth of the economy is bounded and does not rise too much with the scale of the economy. Namely, the model gives rise to a non-linear relationship between the size of the R&D sector and the rate of growth. Third, R&D is Pareto-inefficient, as there are too many research teams searching for the same breakthrough. This problem increases with scale. Fourth, concentration of R&D by monopolistic firms is explained in this model by risk aversion.

Number of Pages in PDF File: 31

Keywords: Endogenous Growth, Innovations, Patent Races, R&D Sector

JEL Classification: O31, O40

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Date posted: February 17, 2004  

Suggested Citation

Zeira, Joseph, Innovations, Patent Races and Endogenous Growth (November 2002). KSG Working Paper No. RWP02-047. Available at SSRN: https://ssrn.com/abstract=351241 or http://dx.doi.org/10.2139/ssrn.351241

Contact Information

Joseph Zeira (Contact Author)
Hebrew University of Jerusalem - Department of Economics ( email )
Mount Scopus
Jerusalem 91905, IL 91905
+972 2 588 3256 (Phone)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
LUISS Guido Carli, DPTEA ( email )
viale Pola 12
Roma, Roma 00198
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