EEP143Lecture2 - EEP143 Lecture2 Outline: Introduction of...

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1 EEP143 Lecture2 Institutions and Innovations Zhen Lei 2 Outline: – Introduction of innovation – The roles of institutions in innovation – Brief history of innovation from Ancient Egyptians until the 20 th century 3 Definition of Innovation Stage 1: creation of an idea of how to do or make something (usually by an individual) the first occurrence of an idea for a new product or process ( Fagerberg 2004 ) Stage 2: making an idea for a new product or process real, putting it into practice the first commercialization of an idea ( Fagerberg 2004) 4 Innovation supply Supply of an innovation determined by state of the scientific and technological knowledge ( technological opportunity ) cost and availability of inputs to innovation ( trained workers, appropriate equipment ) ability to capture the profit from innovation ( appropriability ) 5 Innovation demand Demand for a potential innovation depends on Amount of cost reduction from that innovation ( process innovation; new sources of supply ) Consumer or producer benefit from something new ( product innovation ) Consumer or producer benefit from improvement in an existing good ( incremental product innovation ) 6 The linear model of innovation A useful conceptualization, but not the whole story. science base basic research applied research prototype development commercialization diffusion technical progress economic growth There are forward and backward feedbacks throughout the process of innovation Who should fund which stage?
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7 Example new drug Basic research Applied research screening compounds in test tubes; testing on animals Development Phase I,II, III clinical trials Commercialization packaging; marketing;
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This note was uploaded on 08/01/2008 for the course ECON 143 taught by Professor Wright during the Fall '07 term at University of California, Berkeley.

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EEP143Lecture2 - EEP143 Lecture2 Outline: Introduction of...

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