Economics of Innovation

Suzanne Scotchmer (website)

Technology News and Data links

Courses on Innovation and Science Policy

These materials can be used and modified by others, subject to

Description: The course starts with a short overview of the institutions that have historically supported innovation, then considers knowledge as a public good, the design of incentive mechanisms such as prizes and intellectual property, different models of cumulative innovation; the relationship of competition to IP licensing and joint ventures, patent and copyright enforcement and litigation, private/public funding relationships; patent values and the return on R&D investment, intellectual property issues arising from direct and indirect network externalities, and globalization.

Main Text: Innovation and Incentives (S. Scotchmer, MIT Press 2004).

Supplementary chapter on Japan (Professor R. Aoki)

The course below is suited for advanced undergraduates in economics and for MBA students who have previously completed a course in microeconomic theory. A course for doctoral students should be supplemented with readings from the professional articles listed at the ends of chapters.

Date	Topic	Required Chapter	Other reading and lectures. If required, there is a star.

Week 1	Institutions for Innovation: A Brief History	Ch 1 Review Questions	The Case of Japan (R. Aoki) Zorina Khan, 2005. The Democratization of Invention. Cambridge Press. Joel Mokyr, Giftfs of Athena. Princeton University Press, 2002. Mowery and Rosenberg, 1998. Paths of Innovaton. Cambridge Univ Press
Week 2	Investing in Knowledge	Ch 2 Review Questions	Prizes for science Future Imperfect (on Stem Cells, by Ian Hart)
Week 3	IP Law basics	Ch 3 Review Questions	Landes and Posner: The Economic Structure of Intellectual Property Law Check out a patent. and a plant patent International Herald Tribune on Google's Belgian news wars NYTimes on Google's Belgian News Wars
Week 4/5	Design of IP: length and breadth	Ch 4 Review Questions
Weeks 6	Cumulativeness in Research	Ch 5 Review Questions	“Spitting Image” (Inkjet Printer), Sept 19, 2001, The Economist “Invention of Email”, Pretext Magazine 1998. C. Townes. 1999. How the Laser Happened. Oxford Univ Press Myths and Realities of Neem-based Patents
Week 7	Antitrust and Licensing	Ch 6 Review Questions	Linux & Microsoft in cross-licensing agreement Pfizer v. Apotex WSJ, Jan 2007. Inside Abbott's Tactics to Protect AIDS Drug. WSJ, Nov 2007. Glaxo Sues Abbott .
Week 8	Open Source as an Incentive Mechanism	Guest: Maurer	Open Source Software: The New IP Paradigm. Maurer and Scotchmer, Von Hippel, Democratizing Innovation, MIT Press 2005 Maurer, Sali & Rai. 2004 Finding Cures for Tropical Diseases: Is Open Source the Answer? Public Library of Science: Medicine 1:56-58. Lerner and Tirole, "The Economics of Technology Sharing: Open Source and Beyond" Paper 10956 (2004)
Week 9	Midterm		E. M. Rogers, "The Diffusion of Innovations", Simon & Shuster (Free Press). Latest edition 1995.
Week 10	Enforcement through Litigation and Technical Protections	Ch 7 Review Questions	Linux & Microsoft in cross-licensing agreement
Week 11	The Public Sector	Ch. 8 Review Questions	”Invention of Email”, Pretext Magazine 1998. Nature July 15, 2004. Scientific Impact of Nations. Future Imperfect (on Stem Cells, by Ian Hart) Gerth and Stolberg, "Drug Makers Reap Profits On Tax-Backed Research" New York Times Apr 23, 2000 Link, A. N. Public/Private Partnerships. 2005. Springer. Nelson, Sampat, Ziedonis and Mowery, 2005. Ivory Tower and Industrial Innovation, Stanford University Press.
Week 12	Measurement issues	Ch 9 Review Questions	R. Easterlin. 1999. “Growth Triumphant.” Univ of Mich. Press. P. David, "The Dynamo and the Computer: Historical Perspective on the Productivity Paradox." May 1990. Patent Power Harry Goldstein
Week 13	Finding Cures for Tropical Diseases	Stephen M. Maurer Review Questions	Maurer, Sali & Rai. 2004 Finding Cures for Tropical Diseases: Is Open Source the Answer? Public Library of Science: Medicine 1:56-58.
Week 14	Network Effects	Ch 10 Review Questions	Metcalf's Law Compatibility Issues: Internet, Cellphones Surowiecki, "In Praise of Third Place" (The modern game market) Just for fun: Patent Application on How to Make A Sandwich
Week 15	Innovation in the global Economy	Ch 11 Review Questions	The Economist, "Scattering the Seeds of Invention: The Globalization of R&D" Sept 2004.