Econ 483_Lecture 16_Cumulative innovation

C umulative innovation lecture 16 cumulative

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Unformatted text preview: tion Lecture 16: Cumulative innovation Licensing Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Lecture 16: Cumulative innovation Licensing Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Lecture 16: Cumulative innovation Licensing Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Lecture 16: Cumulative innovation Licensing Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Lecture 16: Cumulative innovation Licensing Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Lecture 16: Cumulative innovation Licensing Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing Cumulative innovation Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing Cumulative innovations Di¤erences in technical advance: Isolated discoveries: e.g. material & drug industries (before the revolution of genetic engineering) - Innovation by a …rm decreases the marginal pro…tability of rivals’research ‘ Building-block’discoveries: e.g. biotechnology, computer software, microelectronic devices, genetic engineering - Innovation by a …rm increases the marginal pro…tability of rivals’research ) Cumulative innovations: each innovator builds on prior discoveries Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing Cumulative innovations Prior innovation boosts later innovators mainly if the 2nd innovation could not be invented without the 1st The social value of the 1st invention includes at least part of the incremental social value provided by the 2nd the 1st innovation merely reduces the cost of achieving the 2nd The cost reduction is part of the social value provided by the 1st. the 1st i...
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