Innovation policy involves trading off monopoly output and pricing today in exchange for incentives for firms to develop new products. While existing research demonstrates that expected profits fuel R&D investments, little is known about the novelty of funded projects. We expand this literature...

We provide evidence that risk aversion leads pharmaceutical firms to underinvest in radical andnovel innovation. We do so by introducing a new measure of novelty: a drug candidate is novelif it is molecularly distinct from prior candidates. Using our measure, we show that firms face arisk-reward...

The Belgian pharmaceutical sector has been accorded a leading role in the attainment of the R&D investment targets which the EU Member States set themselves as part of the Lisbon strategy. To gain a better insight into that sector's research activities, the NBB conducted an ad hoc survey in...

The aim of this paper is to broaden the knowledge concerning the development of Finnish firms’ innovation activities. The results show that during 2008–2017 the share of overseas R&D has risen. Currently, 14–25% of Finnish firms’ total R&D are conducted overseas. If Nokia is taken into...

The real option theory provides a useful tool to evaluate an R&D investment under uncertainty because, unlike the NPV (Net Present Value), it considers the managerial flexibility that may be expand the investment opportunity value. However, most R&D investment projects are open to competing...

We study the optimal R&D trajectory in a setting where new technologies are never perfect backstops in the sense that there is no perfectly clean technology that eventually solves the pollution problem once and for all. New technologies have stings attached, i.e. each emits a specific stock...

This paper aims to provide an overview of the recently introduced demand based innovation policy instrument in Finland - the Strategic Centers for Science, Technology and Innovation (in Finnish - SHOKs). SHOKs are formed to support the innovative activities of existing industries in Finland with...

We examine the effect of research and development (R&D) on long-term economic growth using the Bayesian model averaging (BMA) to deal rigorously with model uncertainty. Previous empirical studies investigated the effect of dozens of regressors on long-term growth, but they did not examine the...

This paper analyzes how standards as a knowledge source are important for R&D, how significantly the (backward) citations by a patent of standard-related documents measure such knowledge flow, and how significantly they affect the performance of downstream R&D. Using both the RIETI inventor...