Please enable JavaScript.
Coggle requires JavaScript to display documents.
Lecture 11: Innovation and patent (Market structure and innovation (types…
Lecture 11: Innovation and patent
Introduction
static efficiency
dynamic efficiency: whether firms have enough incentives to conduct R&D
process innovation: reduce the production cost/ increase the quality of a product
product innovation: create a new product
government policy
subsidize
grant patents
Market structure and innovation
types of innovation
drastic innovation: makes the innovating firm a monopoly
incremental innovation: innovator still faces competition
Efficiency benchmark (p.9)
Competitive market and innovation (p.10)
Monopoly and Innovation (p.12). Page 14 is confusing
Monopoly has less incentive to take the innovation when not consider
Entry
Imitation
Competition via Innovation (formula is very confusing)
consider the elasticity of demand
small
large
R&D Spillovers
firms do less R&D when the strength of the spillover increases
Beta: intensity of spillovers
Beta increases
marginal costs are reduced
firms reduce their research efforts
Joint venture
Legal issues
Public policy
Tax credits (subsidy)
Patents
grants a firm a
temporary monopoly
example: page 42
higher T => more periods to earn monopoly profits => more incentive to innovate
page 46: social planner will choose patent length T to
maximize social surplus
Research joint ventures