Economics 354

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.
    • Chapter 1: Introduction (Pay special attention to Tables 1-1 and 1-3 and the related text.)

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)
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
Group B (at least) reads for 9/22

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):

Group A be sure to read:

Group B be sure to read:

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)

Monday, 10/6

Wednesday, 10/8

  • Freeman and Soete. 1997. Economics of Industrial Innovation.
    • 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 
  • 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)

Mid-term exam (10/17)

III. Intellectual Property and Innovation

A. Patents and trade secrets (10/29 through 11/3)

B. Problems with the current U.S. patent system (11/5 through 11/10)

C. The anti-commons hypothesis (11/12)

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 QWERTYAmerican 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)

C. Financing innovation: Venture capital (11/21 & 11/24)

D. International technology transfer, trade, and economic development (11/26)

E. Technological change and the labor market (12/1, 12/3, 12/5)

V. Technology Policies and National Systems of Innovation (12/8, 12/10)