Global Innovation Contests
This paper develops a two-country, dynamic general equilibrium model with innovation contests to study the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D to discover new products while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country's relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country's long-run growth.
Year of publication: |
2023
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Authors: | Dinopoulos, Elias ; Syropoulos, Constantinos ; Tsoulouhas, Theofanis |
Publisher: |
Munich : Center for Economic Studies and ifo Institute (CESifo) |
Subject: | innovation contests | economic growth | scale effects | R&D | rent-protection activities | barriers to innovation | wage premium |
Saved in:
freely available
Series: | CESifo Working Paper ; 10230 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 1832585360 [GVK] hdl:10419/271874 [Handle] RePec:ces:ceswps:_10230 [RePEc] |
Classification: | F10 - Trade. General ; F30 - International Finance. General ; F40 - Macroeconomic Aspects of International Trade and Finance. General |
Source: |
Persistent link: https://www.econbiz.de/10014290140