Economics of Science and Technology
Jeffrey Parker, Reed College
Fall 2014
As with most courses, this reading list only scratches the surface of the interesting and relevant literature on each of the topics we discuss. If you are interested in additional readings, please contact the instructor or search for relevant topics on EconLit.
Many of the readings that are not from books are available on the Internet. Most of these will have links directly to the reading. Note that most of these are available through online subscriptions that can be accessed only if you are connecting through the Reed network.
Starred (*) readings are not required. They are listed for those who want further detail about aspects of the topic being covered.
In some sections there is too much reading for everyone to do, so we will assign specific readings to individuals or groups, who will report on the content of these readings for the remainder of the class.
Table of Contents
I. Knowledge, Innovation, and Productivity Growth
II. Innovation: Theories and Evidence
III. Intellectual Property and Innovation
IV. Issues in Technological Change
V. Technology Policy and National Systems of Innovation
I. Knowledge, Innovation, and Productivity Growth
A. Knowledge as an economic good (9/5)
- Foray, Dominique. 2004. The Economics of Knowledge. Cambridge, Mass.: MIT Press.
- Chapter 5: Knowledge Spillovers
- Chapter 6: Knowledge as a Public Good
- Freeman, Chris, and Luc Soete. 1997. The Economics of Industrial Innovation, 3rd ed. Cambridge, Mass.: MIT Press.
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Chapter 1: Introduction (Pay special attention to Tables 1-1 and 1-3 and the related text.)
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B. The nature of innovation (9/8)
- Rosenberg, Nathan. 1979. Technological Interdependence in the American Economy. Technology and Culture 20 (1):25-50. Reprinted as Chapter 3 in N. Rosenberg, Inside the Black Box: Technology and Economics. Cambridge and New York: Cambridge University Press.
- Mokyr, Joel. 1990. The Lever of Riches: Technological Creativity and Economic Progress, New York: Oxford University Press.
- Chapter 1: Introduction
- Petroski, Henry. 1992. The Evolution of Useful Things, New York: Alfred Knopf.
- Chapter 4: From Pins to Paper Clips
C. Innovation and productivity growth (9/10)
- Maddison, Angus. 1994. Explaining the Economic Performance of Nations, 1820-1989. Chapter 2 in W.J. Baumol, R.R. Nelson, and E.N. Wolff, eds., Convergence of Productivity: Cross-National Studies and Historical Evidence, pp. 20-61.
- Baumol, William J. 2010. The Microtheory of Innovative Entrepreneurship. Princeton N.J.: Princeton University Press.
- Introduction and Chapter 1
- Hall, Bronwyn H. 2011. Innovation and Productivity. Cambridge, Mass.: National Bureau of Economic Research. NBER Working Papers, No. 17178.
D. Selected highlights from technological history
1. The Industrial Revolution (9/15)
- Mokyr. 1990. Lever of Riches.
- Chapter 5: The Years of Miracles: The Industrial Revolution, 1750-1830
- Freeman and Soete. 1997. Economics of Industrial Innovation.
- Chapter 2: The Industrial Revolution.
- Mokyr, Joel. 2009. Intellectual Property Rights, the Industrial Revolution, and the Beginnings of Modern Economic Growth. American Economic Review 99 (2):349-355.
2. The 19th and 20th centuries (9/17)
- Mokyr. 1990. Lever of Riches.
- Chapter 6: The Later Nineteenth Century: 1830-1914.
- Mowery, David C., and Nathan Rosenberg. 1998. Paths of Innovation: Technological Change in 20th-Century America, Cambridge and New York: Cambridge University Press.
- Chapter 1: Introduction
- Chapter 2: The Institutionalization of Innovation, 1900-90.
- Mokyr, Joel. 1997. Are We Living in the Middle of an Industrial Revolution? Federal Reserve Bank of Kansas City Economic Review 82 (2):31-43.
II. Innovation: Theories and Evidence
A. Measuring innovative activity using patents and other data (9/19 & 9/22)
All read for 9/19
- Patel, Pari, and Keith Pavitt. 1995. Patterns of Technological Activity: Their Measurement and Interpretation. Chapter 2 in P. Stoneman, ed., Handbook of the Economics of Innovation and Technological Change, Blackwell. (An overview of some of the traditional methods of measuring innovation.)
- Trajtenberg, Manuel. 2002. A Penny for Your Quotes: Patent Citations and the Value of Innovations. Chapter 2 in A.B. Jaffe and M. Trajtenberg, eds., Patents, Citations, and Innovations: A Window on the Knowledge Economy. Cambridge, Mass.: MIT Press. (A discussion of one particular method: patent citations.)
Group A (at least) reads for 9/22
- Fischer, Timo, and Jan Leidinger. 2014. Testing Patent Value Indicators on Directly Observed Patent Value—An Empirical Analysis of Ocean Tomo Patent Auctions. Research Policy 43 (3):519-529.
- Fontana, Roberto, Alessandro Nuvolari, Hiroshi Shimizu, and Andrea Vezzulli. 2013. Reassessing Patent Propensity: Evidence from a Dataset of R&D Awards, 1977–2004. Research Policy 42 (10):1780-1792.
Group B (at least) reads for 9/22
- de Rassenfosse, Gaétan, Hélène Dernis, Dominique Guellec, Lucio Picci, and Bruno van Pottelsberghe de la Potterie. 2013. The Worldwide Count of Priority Patents: A New Indicator of Inventive Activity. Research Policy 42 (3):720-737.
- Alexopoulos, Michelle. 2011. Read All about It!! What Happens after a Technology Shock?American Economic Review 101 (4):1144-79.
B. Microeconomic theory with innovation (9/24 & 9/26)
- Schumpeter, Joseph A. Capitalism, Socialism, and Democracy. New York: Harper & Row, 1950.
- Chapter VII. The Process of Creative Destruction
- Baumol. Microtheory of Innovative Entrepreneurship.
- Chapters 1 through 7
C. Diffusion of innovations (9/29)
All read (focus on general ideas, not on details):
- Cohen, Wesley M., and Daniel A. Levinthal. 1989. Innovation and Learning: The Two Faces of R&D. Economic Journal 99 (397):569-596.
Group A be sure to read:
- Robertson, Paul L., and Parimal R. Patel. 2007. New Wine in Old Bottles: Technological Diffusion in Developed Economies. Research Policy 36 (5):708-721.
- Nelson, Andrew J. 2009. Measuring Knowledge Spillovers: What Patents, Licenses and Publications Reveal about Innovation Diffusion. Research Policy 38 (6):994-1005.
Group B be sure to read:
- Conley, Timothy G., and Christopher R. Udry. 2010. Learning about a New Technology: Pineapple in Ghana. American Economic Review 100 (1):35-69.
- Spolaore, Enrico, and Romain Wacziarg. 2011. Long-Term Barriers to the International Diffusion of Innovations. Cambridge, Mass.: National Bureau of Economic Research. NBER Working Papers, No. 17271.
D. Uncertainty, risk, and strategies of investment in innovation (10/1 & 10/3)
- Freeman and Soete. 1997. Economics of Industrial Innovation.
- Chapter 10: Uncertainty, Project Evaluation, and Innovation (light reading for now)
- Chapter 11: Innovation and the Strategy of the Firm
- Note: Both of these chapters refer frequently to Project SAPPHO, which is discussed in Chapter 8. A brief skimming of Chapter 8 would be useful to help understand these references.
- Teece, David J. 1992. Strategies for Capturing the Financial Benefits from Technological Innovation. Chapter 7 in Technology and the Wealth of Nations, edited by N. Rosenberg, R. Landau, and D. Mowery, Stanford, Calif.: Stanford University Press.
E. What kinds of firms and individuals innovate? (10/6 through 10/13)
- Optional Reading: *Syverson, Chad. 2011. What Determines Productivity?Journal of Economic Literature 49 (2):326-365.
Monday, 10/6
- Jensen, Morten Berg, Björn Johnson, Edward Lorenz, and Bengt Åke Lundvall. 2007. Forms of Knowledge and Modes of Innovation. Research Policy 36 (5):680-693.
- Arthur, W. Brian. 2007. The Structure of Invention. Research Policy 36 (2):274-287.
- Jones, Benjamin, E. J. Reedy, and Bruce A. Weinberg. 2014. Age and Scientific Genius. National Bureau of Economic Research Working Paper Series No. 19866.
Wednesday, 10/8
- Freeman and Soete. 1997. Economics of Industrial Innovation.
- Chapter 9: Innovation and Size of Firm
- Chapter 9: Innovation and Size of Firm
- Aghion, Philippe, Nick Bloom, Richard Blundell, Rachel Griffith, and Peter Howitt. 2005. Competition and Innovation: An Inverted-U Relationship. Quarterly Journal of Economics 120 (2): 701-728.
- *Goettler, Ronald L., and Brett R. Gordon. 2011. Does AMD Spur Intel to Innovate More?Journal of Political Economy 119 (6):1141-1200. (An interesting, but fairly mathematical, paper that is not required.)
Friday, 10/10
- Rosenberg, Nathan. 1982. Inside the Black Box:Technology and Economics. Cambridge and New York: Cambridge University Press.
- Chapter 6: Learning by Using
- Chapter 6: Learning by Using
- von Hippel, Eric. 1988. The Sources of Innovation. Oxford and New York: Oxford University Press.
- Chapters 2 through 5.
Monday, 10/13
- Lester, Richard K., and Michael J. Piore. 2004. Innovation, The Missing Dimension. Cambridge, Mass.: Harvard University Press.
- Introduction
- Chapter 1: Integration in Cell Phones, Blue Jeans, and Medical Devices
- Chapter 2: Where Do Problems Come From?
- Chapter 3: Conversation, Interpretation, and Ambiguity
F. Academic research and corporate innovation (10/27)
- Jaffe, Adam B. 1989. Real Effects of Academic Research. American Economic Review 79 (5):957-970.
- Anselin, Luc, Attila Varga, and Zoltan Acs. 1997. Local Geographic Spillovers between University Research and High Technology Innovations. Journal of Urban Economics 42 (3):422-448.
- O'Shea, Rory P., Thomas J. Allen, Arnaud Chevalier, and Frank Roche. 2005. Entrepreneurial Orientation, Technology Transfer and Spinoff Performance of U.S. Universities. Research Policy 34 (7):994-1009.
- Zucker, Lynne G., and Michael R. Darby. 2014. Defacto and Deeded Intellectual Property: Knowledge-Driven Co-Evolution of Firm Collaboration Boundaries and IPR Strategy. National Bureau of Economic Research Working Paper Series No. 20249.
Mid-term exam (10/17)
III. Intellectual Property and Innovation
A. Patents and trade secrets (10/29 through 11/3)
- Scotchmer, Suzanne. 2004. Innovation and Incentives. Cambridge, Mass.: MIT Press.
- Chapters 1-3
- de Saint-Georges, Matthis, and Bruno van Pottelsberghe de la Potterie. 2013. A Quality Index for Patent Systems. Research Policy 42 (3):704-719. (Peruse this paper briefly to see the kinds of characteristics that vary across patent systems and how some of the major countries rank.)
- Friedman, David D., William M. Landes, and Richard A. Posner. 1991. Some Economics of Trade Secret Law. Journal of Economic Perspectives 5 (1):61-72.
- Hall, Bronwyn, Christian Helmers, Mark Rogers, and Vania Sena. 2014. The Choice between Formal and Informal Intellectual Property: A Review. Journal of Economic Literature 52 (2):375-423.
- Hall, Bronwyn H., and Dietmar Harhoff. 2012. Recent Research on the Economics of Patents. Annual Review of Economics 4:541-565.
- Moser, Petra. 2013. Patents and Innovation: Evidence from Economic History. Journal of Economic Perspectives 27 (1):23-44.
- Furman, Jeffrey L., and Scott Stern. 2011. Climbing atop the Shoulders of Giants: The Impact of Institutions on Cumulative Research. American Economic Review 101 (5):1933-1963.
B. Problems with the current U.S. patent system (11/5 through 11/10)
- Jaffe, Adam B., and Josh Lerner. 2004. Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation and Progress, and What to Do about It. Princeton, N.J.: Princeton University Press.
- Chapters 1-4, and 7.
- Chapters 1-4, and 7.
- Frakes, Michael D., and Melissa F. Wasserman. 2014. Is the Time Allocated to Review Patent Applications Inducing Examiners to Grant Invalid Patents? Evidence from Micro-Level Application Data. National Bureau of Economic Research Working Paper Series No. 20337.
- Reitzig, Markus, Joachim Henkel, and Christopher Heath. 2007. On Sharks, Trolls, and their Patent Prey---Unrealistic Damage Awards and Firms' Strategies of "Being Infringed." Research Policy 36 (1):134-154.
- Cohen, Lauren, Umit Gurun, and Scott Duke Kominers. 2014. Patent Trolls: Evidence from Targeted Firms. National Bureau of Economic Research Working Paper Series No. 20322.
- Boldrin, Michele, and David K. Levine. 2013. The Case Against Patents. Journal of Economic Perspectives 27 (1):3-22.
- Hall, Bronwyn H. 2009. Business and Financial Method Patents, Innovation, and Policy. Scottish Journal of Political Economy 56 (4):443-473.
- Graham, Stuart, and Saurabh Vishnubhakat. 2013. Of Smart Phone Wars and Software Patents. Journal of Economic Perspectives 27 (1):67-86.
C. The anti-commons hypothesis (11/12)
- Heller, Michael A., and Rebecca S. Eisenberg. 1998. Can Patents Deter Innovation? The Anticommons in Biomedical Research. Science, New Series, 280 (5364):698-701.
- Murray, Fiona, and Scott Stern. 2006. When Ideas Are Not Free: The Impact of Patents on Scientific Research. Innovation Policy and the Economy 7:33-69.
- Walsh, John P., Wesley M. Cohen, and Charlene Cho. 2007. Where Excludability Matters: Material versus Intellectual Property in Academic Biomedical Research. Research Policy 36 (8):1184-1203.
D. Economics of open-source software (11/14)
- Lerner, Josh, and Jean Tirole. 2002. Some Simple Economics of Open Source. Journal of Industrial Economics 50 (2):197-234.
- *Fershtman, Chaim, and Neil Gandal. 2011. A Brief Survey of the Economics of Open Source Software. London: Centre for Economic Policy Research. CEPR Discussion Papers, No. 8434. (This is not required, but has useful and more recent references for anyone interested in reading more.)
IV. Issues in Techological Change
A. Path dependence: Examples and counterexamples (11/17)
- Arthur, W. Brian. 1994. Increasing Returns and Path Dependence in the Economy, Ann Arbor, Mich.: University of Michigan Press.
- Chapter 1: Positive Feedbacks in the Economy
- Chapter 2: Competing Technologies, Increasing Returns, and Lock-In by Historical Small Events
- David, Paul A. 1985. Clio and the Economics of QWERTY. American Economic Review 75 (2):332-337.
- Liebowitz, S. J., and Stephen E. Margolis. 1990. The Fable of the Keys. Journal of Law and Economics 33 (1):1-25.
B. Networks, standards, and externalities (11/19)
- Katz, Michael L., and Carl Shapiro. 1994. Systems Competition and Network Effects. Journal of Economic Perspectives 8 (2):93-115.
- Besen, Stanley M., and Joseph Farrell. 1994. Choosing How to Compete: Strategies and Tactics in Standardization. Journal of Economic Perspectives 8 (2):117-131.
- Liebowitz, S. J., and Stephen E. Margolis. 1994. Network Externality: An Uncommon Tragedy. Journal of Economic Perspectives 8 (2):133-150.
- Basker, Emek. 2012. Raising the Barcode Scanner: Technology and Productivity in the Retail Sector. American Economic Journal: Applied Economics 2 (3):1-27.
C. Financing innovation: Venture capital (11/21 & 11/24)
- Berlin, Mitchell. 1998. That Thing Venture Capitalists Do. Federal Reserve Bank of Philadelphia Business Review January/February:15-26.
- Gompers, Paul A., and Josh Lerner. 2001. The Money of Invention: How Venture Capital Creates New Wealth. Cambridge: Mass.: Harvard Business School Press.
- Chapters 2-6.
- Haeussler, Carolin, Dietmar Harhoff, and Elisabeth Mueller. 2014. How Patenting Informs VC Investors – The Case of Biotechnology. Research Policy 43 (8):1286-1298.
- Useche, Diego. 2014. Are Patents Signals for the IPO Market? An EU–US Comparison for the Software Industry. Research Policy 43 (8):1299-1311.
- Kerr, William R., Ramana Nanda, and Matthew Rhodes-Kropf. 2014. Entrepreneurship as Experimentation. Journal of Economic Perspectives 28 (3):25-48.
- Optional Reading: *Da Rin, Marco, Thomas F. Hellmann, and Manju Puri. 2011. A Survey of Venture Capital Research. Cambridge, Mass.: National Bureau of Economic Research. NBER Working Papers, No. 17523. (This is a recent survey of the literature on venture capital. It is too long to read, but will be a useful reference for anyone who wants to learn about the current state of VC research.)
D. International technology transfer, trade, and economic development (11/26)
- Caselli, Francesco, and John Coleman. 2001. Cross-Country Technology Diffusion: The Case of Computers. American Economic Review 91 (2):328-335.
- Comin, Diego, and Bart Hobijn. 2004. Cross-Country Technology Adoption: Making the Theories Face the Facts. Journal of Monetary Economics 51 (1):39-83.
- Castellacci, Fulvio, and Jose Miguel Natera. 2013. The Dynamics of National Innovation Systems: A Panel Cointegration Analysis of the Coevolution Between Innovative Capability and Absorptive Capacity. Research Policy 42 (3):579-594.
- Comin, Diego, William Easterly, and Erick Gong. 2010. Was the Wealth of Nations Determined in 1000 BC? American Economic Journal: Macroeconomics 2 (3):65-97.
E. Technological change and the labor market (12/1, 12/3, 12/5)
- The Future of Jobs: The Onrushing Wave. Economist, January 18, 2014.
- Goldin, Claudia, and Lawrence F. Katz. 2008. The Race Between Education and Technology. Cambridge, Mass.: Belknap Press of Harvard University Press.
- Chapter 2: Inequality across the Twentieth Century
- Chapter 3: Skill-Biased Technological Change
- Acemoglu, Daron. 2002. Technical Change, Inequality, and the Labor Market. Journal of Economic Literature 40 (1):7-72.
- Beaudry, Paul, Mark Doms, and Ethan Lewis. 2010. Should the Personal Computer Be Considered a Technological Revolution? Evidence from U.S. Metropolitan Areas. Journal of Political Economy 118 (5):988-1036.
- Frey, Carl Benedikt, and Michael Osborne. 2013. The Future of Employment: How Susceptible Are Jobs to Computerisation? University of Oxford Manuscript.
V. Technology Policies and National Systems of Innovation (12/8, 12/10)
- Mokyr. 1990. Lever of Riches.
- Chapter 7: Understanding Technological Progress
- Nelson, Richard R. 2008. What Enables Rapid Economic Progress: What Are the Needed Institutions? Research Policy 37 (1):1-11.
- Ács, Zoltán J., Erkko Autio, and László Szerb. 2014. National Systems of Entrepreneurship: Measurement Issues and Policy Implications. Research Policy 43 (3):476-494.
- Mowery, David C., and Nathan Rosenberg. 1993. The U.S. National Innovation System. Chapter 2 in National Innovation Systems, edited by R. R. Nelson. Oxford and New York: Oxford University Press.
- Liu, Feng-Chao, Denis Fred Simon, Yu-Tao Sun, and Cong Cao. 2011. China's Innovation Policies: Evolution, Institutional Structure, and Trajectory. Research Policy 40 (7):917-931.
- Cincera, Michele, and Reinhilde Veugelers. 2014. Differences in the Rates of Return to R&D for European and US Young Leading R&D Firms. Research Policy 43 (8):1413-1421.
- Padilla-Pérez, Ramón, and Yannick Gaudin. 2014. Science, Technology and Innovation Policies in Small and Developing Economies: The Case of Central America. Research Policy 43 (4):749-759.
- *Steil, Benn, David G. Victor, and Richard R. Nelson, eds. 2002. Technological Innovation and Economic Performance. Princeton, N.J.: Princeton University Press. (Chapters 3-8 describe the recent innovation performances of the U.S., Japan, Germany, France, the U.K., and the Nordic countries.)
- *Nelson, Richard R., ed. 1993. National Innovation Systems: A Comparative Analysis. Oxford: Oxford University Press. (Contains chapters describing the national innovation systems of many countries.)
- *There is a whole series of books (in the Reed Library) called Economic Development of XX since 1870, where XX is a country. You are encouraged to look at these for specific information on innovation policies in particular countries. See also a series of articles in the February 2002 issue of Research Policy.