We construct a tractable general equilibrium model of cumulative innovation and growth, in which new ideas strictly improve upon frontier technologies, and productivity improvements are drawn in a stochastic manner. The presence of positive knowledge spillovers implies that the decentralized...

This paper analyzes the optimal protection strategy for an innovator of a complex innovation who faces the risk of imitation by a competitor. We suppose that the innovation can be continuously fragmented into sub-innovations. We characterize the optimal mix of patent and trade secrets when the...

Continued lobbying by high-end, American designers for intellectual property-type fashion design protection has culminated in the proposed Innovative Design Protection and Piracy Prevention Act, intended to introduce EU standards. Using a sequential, 2-firm, vertical differentiation framework,...

In this paper, we offer a novel explanation to the surge in patenting bserved during the last years. With low patentability standards at PTOs (Patent and Trademark Offices awarding so-called bad patents), not only “false innovators” have the chance of being granted patents but also, and more...

This paper studies the incentives that developing countries have to protect intellectual properties rights (IPR). On the one hand, free-riding on rich countries technology reduces their investment cost in R&D. On the other hand, firm that violates IPR cannot legally export in a country that...

Recent empirical studies suggest a need for a flexible patent regime responding to industry characteristics. In practice, sector-specific modifications of patent strength already exist but lack theoretical foundation. This paper intends to make up for this neglect by scrutinizing in what...

This paper estimates the effects of tax changes on the U.K. economy. Identification is achieved by isolating the ‘exogenous’ tax policy shocks in the post-war U.K. economy using a narrative strategy as in Romer and Romer (2010). The resulting tax changes are shown to be unforecastable on the...

We exploit Japan’s 19th century move from autarky to free trade to provide the first test of the general validity of the price formulation of the Heckscher-Ohlin theorem. In this formulation a country’s autarky factor price vector imposes a single refutable prediction on the economy’s...

We study a dynamic stochastic general equilibrium model where agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions adversely affects the economy’s capital stock. We assume that the mapping from climate change to damages is subject...

Is there a link between loose monetary conditions, credit growth, house price booms, and financial instability? This paper analyzes the role of interest rates and credit in driving house price booms and busts with data spanning 140 years of modern economic history in the advanced economies. We...