Global Innovation Contests

38 Pages Posted: 26 Jan 2023

See all articles by Elias Dinopoulos

Elias Dinopoulos

University of Florida - Warrington College of Business Administration - Department of Economics; Department of Economics

Constantinos Syropoulos

LeBow College of Business, Drexel University

Theofanis Tsoulouhas

University of California

Date Written: 2023

Abstract

This paper develops a two-country, dynamic general equilibrium model with innovation contests to study the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D to discover new products while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country’s relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country’s long-run growth.

Keywords: innovation contests, economic growth, scale effects, R&D, rent-protection activities, barriers to innovation, wage premium

JEL Classification: F100, F300, F400

Suggested Citation

Dinopoulos, Elias and Dinopoulos, Elias and Syropoulos, Constantinos and Tsoulouhas, Theofanis, Global Innovation Contests (2023). CESifo Working Paper No. 10230, Available at SSRN: https://ssrn.com/abstract=4338248 or http://dx.doi.org/10.2139/ssrn.4338248

Elias Dinopoulos (Contact Author)

University of Florida - Warrington College of Business Administration - Department of Economics ( email )

224 Matherly Hall
Gainesville, FL 32611-7140
United States
352-392-8150 (Phone)
352-392-7860 (Fax)

Department of Economics ( email )

Gainesville, FL 32610-0496
United States

Constantinos Syropoulos

LeBow College of Business, Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States
215-895-2792 (Phone)
215-895-6975 (Fax)

HOME PAGE: http://faculty.lebow.drexel.edu/SyropoulosC/

Theofanis Tsoulouhas

University of California ( email )

540 Alumni Ln
Davis, CA 95616
United States

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