Economics of Innovation (ECON30027)

Innovation is one of the main sources of economic development. Improving their innovative capacity is a major challenge for countries in both the developed and developing world. The key questions in the economics of innovation as a field are which innovations to encourage, how to reward them, and how to encourage their diffusion. This subject considers the different methods for rewarding innovation, such as prizes, intellectual property, and contests. We will study formal microeconomic models analysing the advantages and disadvantages of each method in the creation of knowledge. As an example, we will analyse how encouraging investment in neglected diseases, such as malaria and tuberculosis, may be different from encouraging investment in mobile technologies. The benefits of public vs. private sponsorship will also be investigated. In the case of intellectual property, we will evaluate what the available tools of protection are and how they meet the challenges posed by the cumulative nature of innovation. Our discussion will include different innovative environments, ranging from open source communities to research joint ventures. Finally, we will consider how the domains of intellectual property protection and antitrust policy may complement and contradict each other. Throughout the course, our discussion will be guided by practical examples and case studies. We will tackle some contemporary policy questions, such as whether genes should be patented.