Economics
354
Economics of Science and Technology
Spring
2008
Jeffrey
Parker, Reed College
Reading List
Readings marked with an asterisk (*) are not required (but they're still really good!). They are included for those who wish to pursue selected topics in more detail. The instructor can provide additional references on most of the subjects listed.
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.
This reading list is very ambitious; we may not have time to cover all sections.
Sections:
I. Introduction to Technological Progress and Economic Growth
II. Origins and Rise of Modern Technology
III.
The Nature of Knowledge, Invention, and Innovation
IV. Measuring
and Attributing Innovation
V. Intellectual Property Rights
and Incentives for Innovation
VI. A Theory of Oligopolistic
Innovation
VII. Path Dependence and Network Effects
VIII. Uncertainty, Risk, and the Financing of R&D
IX.
Technological Change and the Labor Market
X. International
Technology Transfer, Trade, and Economic Development
XI.
Technology Policy and National Systems of Innovation
A. Key Issues in the Economics of Science and Technology [1/30, 2/1]
- Foray, Dominique, The Economics of Knowledge, MIT Press, 2004, Chapter 5: "Knowledge Spillovers," and Chapter 6: "Knowledge as a Public Good." (A good introduction to some of the unique aspects of knowledge as an economic commodity.)
- Steil, Benn, David G. Victor, and Richard R. Nelson, "Introduction and Overview," Chapter 1 in Technological Innovation and Economic Performance, Princeton University Press, 2002. (This is the introductory chapter to a book. We won't read most of the rest of the book, but it provides a convenient framework laying out some of the key ideas we will discuss.)
- Schumpeter, Joseph A., Capitalism, Socialism, and Democracy, 3rd ed., Harper & Row, 1950, Chapter VII: "The Process of Creative Destruction." (A classic! Everyone who studies economics of technology must read a little Schumpeter!)
- Freeman, Chris, and Luc Soete, The Economics of Industrial Innovation, 3rd ed., MIT Press, 1997, Chapter 1: "Introduction." (Introductory chapter to one of the main books we will read. Pay special attention to Tables 1-1 and 1-3 and the related text.)
- Stephan, Paula, "The Economics of Science," Journal of Economic Literature, 34(3), September 1996, 1199-1235. (Journal of Economic Literature surveys are by their nature boring reading. Use this paper to get a sense of the issues that are important and for citations to basic literature on those issues.)
- Mokyr, Joel, The Lever of Riches, Oxford University Press, 1990, Chapter 1: "Introduction." (The introductory chapter to a standard text on the history of economic growth and technology. We will read a few more chapters of this book; the chapters that are not required are highly recommended.)
B. The Link Between Technology and Growth [2/4]
- Grossman, Gene M., and Elhanan Helpman, "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, 8(1), Winter 1994, 23-44. (This is a summary of modern growth theory, which is not the central subject of this course, but is closely related. Read this to get a sense of how economists have formalized the concepts we will study in dynamic mathematical models.)
- Freeman and Soete, Economics of Industrial Innovation, Chapter 13: "Technology and Economic Growth." (pp. 316-323 only).
- Maddison, Angus, "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. (Some results from the "growth accounting" literature, applied broadly and over a long time span.)
- Oliner, Stephen D., and Daniel E. Sichel, "Information Technology and Productivity: Where Are We Now and Where Are We Going?" FRB Atlanta Economic Review Third Quarter, 2002, 15-44. (One piece of a sizable literature quantifying the growth effects of modern information technology.)
- Chatterjee, Satyajit, "Ores and Scores: Two Cases of How Competition Led to Productivity 'Miracles,'" Federal Reserve Bank of Philadelphia Business Review, First Quarter 2005, 7-15.
- *Jorgenson, Dale W., "Information Technology and the U.S. Economy," American Economic Review, March 2001, 91(1), 1-32. (A definitive analysis of role of IT in growth, but slightly less up-to-date than the Oliner and Sichel paper.)
A. Pre-Industrial Technological Development (not discussed in class)
- *Mokyr, Lever of Riches, Chapter 2: Classical Antiquity, Chapter 3: "The Middle Ages," and Chapter 4: "The Renaissance and Beyond: Technology 1500-1750."
B. The Industrial Revolution [2/6]
- Mokyr, Lever of Riches, Chapter 5: "The Years of Miracle: The Industrial Revolution, 1750-1830."
- Freeman and Soete, Economics of Industrial Innovation, Chapter 2: "The Industrial Revolution."
C. Development of Modern Industries
1. General [2/8]
- Mokyr, Lever of Riches, Chapter 6: "The Later Nineteenth Century: 1830-1914."
- Mowery, David C., and Nathan Rosenberg, Paths of Innovation: Technological Change in 20th-Century America, Cambridge University Press, 1998, Chapter 1: "Introduction" and Chapter 2: "The Institutionalization of Innovation, 1900-90."
2. Electricity and Steel (not discussed in class)
- *Freeman and Soete, Economics of Industrial Innovation, Chapter 3: "The Age of Electricity and Steel."
- *Mowery and Rosenberg, Paths of Innovation, Chapter 5: "Electric Power."
3. Oil, Chemicals, and Plastics (not discussed in class)
- *Freeman and Soete, Economics of Industrial Innovation, Chapter 4: "Process Innovations in Oil and Chemicals," and Chapter 5: "Synthetic Materials."
- *Mowery and Rosenberg, Paths of Innovation, Chapter 4: "Chemicals."
- *Landau, Ralph, and Nathan Rosenberg, "Successful Commercialization in the Chemical Process Industries," Chapter 4 in Technology and the Wealth of Nations, edited by Nathan Rosenberg, Ralph Landau, and David C. Mowery, (Stanford, CA: Stanford University Press, 1992).
4. Engines, Autos, Aircraft and Mass Production (not discussed in class)
- *Freeman and Soete, Economics of Industrial Innovation, Chapter 6: "Mass Production and the Automobile."
- *Mowery and Rosenberg, Paths of Innovation, Chapter 3: "The Internal Combustion Engine."
- *Mowery, David C., and Nathan Rosenberg, "Technical Change in the Commercial Aircraft Industry, 1925-1975," in Nathan Rosenberg, Inside the Black Box: Technology and Economics, Cambridge University Press, 1982, Chapter 8.
5. Electronics and Computers [2/11]
- Freeman and Soete, Economics of Industrial Innovation, Chapter 7: "Electronics and Computers."
- Mowery and Rosenberg, Paths of Innovation, Chapter 6: "The Electronics Revolution, 1947-90."
- Mokyr, Joel, "Are We Living in the Middle of an Industrial Revolution?" Federal Reserve Bank of Kansas City Economic Review, 82(2), Second Quarter 1997, 31-43.
6. Biotechnology and Nanotechnology [2/15]
- Ebers, Mark, and Walter W. Powell, "Biotechnology: Its Origins, Organization, and Outputs," Research Policy, 36(4), May 2007, 433-437. (The introductory summary to an entire issue devoted to biotechnology.)
- Swan, Jacky, Anna Goussevskaia, Sue Newell, Maxine Robertson, Mike Bresnen and Ademola Obembe, "Modes of Organizing Biomedical Innovation in the UK and US and the Role of Integrative and Relational Capabilities," Research Policy 36(4), May 2007, 529-547.
- Hopkins, Michael M., Paul A. Martin, Paul Nightengale, Alison Kraft, and Surya Mahdi, "The Myth of the Biotech Revolution: An Assessment of Technological, Clinical and Organizational Change," Research Policy, 36(4), May 2007, 566-589.
- Bozeman, Barry, Philippe Laredo, and Vincent Mangematin, "Understanding the Emergence and Deployment of 'Nano' S&T," Research Policy, 34(6), July 2007, 807-812. (The introductory summary to an issue discussing nanotechnology.)
A. The Nature of Invention and Innovation [2/18]
- Petroski, Henry, The Evolution of Useful Things, Alfred Knopf, 1992, Chapter 4: "From Pins to Paper Clips."
- Rosenberg, Inside the Black Box, Chapter 3: "Technological Interdependence in the American Economy."
- Foray, Economics of Knowledge, Chapter 4: "Reproduction of Knowledge"
B. What Determines the Rate of Innovation
- Mokyr, Lever of Riches, Chapter 7: "Understanding Technological Progress." [2/20]
- Nelson, Richard R., "What Enables Rapid Economic Progress: What Are the Needed Institutions?" Research Policy, 37(1), February 2008, 1-11. [2/20]
- Arthur, W. Brian, "The Structure of Invention," Research Policy, 36(2), March 2007, 274-287. [2/22]
- Varsakelis, Nikos C., "Education, Political Institutions, and Innovative Activity: A Cross-Country Empirical Investigation," Research Policy, 35(7), September 2006, 1983-90. [2/22]
- Lamoreaux, Naomi R., and Kenneth L. Sokoloff, eds., Financing Innovation in the United States, 1870 to the Present, Cambridge, Mass.: MIT Press, 2007, Introduction, 1-37. (Available on reserve) [2/22]
A. Measuring Innovative Activity [2/25]
- Patel, Pari, and Keith Pavitt, "Patterns of Technological Activity: Their Measurement and Interpretation," Chapter 2 in P.Stoneman, ed., Handbook of the Economics of Innovation and Technological Change, Blackwell, 1995. (An overview of some of the common methods of measuring innovation.)
- Trajtenberg, Manuel, "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, MIT Press, 2002. (A discussion of one particular method: patent citations.)
- *Godin, Benoit, "Science, Accounting and Statistics: The Input-Output Framework," Research Policy 36(9), November 2007, 1388-1403. (An interesting discussion of the origins of the attempt to measure the inputs and outputs of scientific activity.)
B. Where Does Innovation Come From?
- Rosenberg, Inside the Black Box, Chapter 7: "How Exogenous Is Science?" (To what extent do scientists respond to the market demand in choosing projects? This is an older piece that predates the Bayh-Dole Act.) [2/27]
- *Mowery, David C., and Nathan Rosenberg, Technology and the Pursuit of Economic Growth, Cambridge University Press, 1989, Chapter 6: "Postwar Federal Investment in Research and Development." (A summary of the involvement of the federal government in R&D.)
- Rosenberg, Inside the Black Box, Chapter 6: "Learning by Using." (The role of users in innovation.) [2/27]
- von Hippel, Eric, The Sources of Innovation, Oxford University Press, 1988, Chapters 2 through 5. (A detailed study of the question "Who innovates?") [2/29]
- Freeman and Soete, Economics of Industrial Innovation, Chapter 8: "Success and Failure in Industrial Innovation," and Chapter 9: "Innovation and Size of Firm." (What kinds of attempted innovations are most successful? Are large or small firms more innovative?) [3/3]
- Aghion, Philippe, Nick Bloom, Richard Blundell, Rachel Griffith, and Peter Howitt, "Competition and Innovation: An Inverted-U Relationship," Quarterly Journal of Economics 120(2), May 2005, 701-728. (Available online through Reed Library ejournals.) [3/3]
- Jensen, Morten Berg, Björn Johnson, Edward Lorenz, and Bengt Åke Lundvall, "Forms of Knowledge and Modes of Innovation," Research Policy, 36(5), June 2007, 680-693. [3/5]
- Robertson, Paul L., and Parimal R. Patel, "New Wine in Old Bottles: Technological Diffusion in Developed Economies," Research Policy, 36(5), June 2007, 708-721. [3/5]
C. Innovation Strategies [3/7]
- Freeman and Soete, Economics of Industrial Innovation, Chapter 10: "Uncertainty, Project Evaluation, and Innovation," and Chapter 11: "Innovation and the Strategy of the Firm."
- Teece, David J., "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 University Press, 1992.
A. Intellectual Property and Innovation [3/10, 3/12. 3/14, 3/26]
- Scotchmer, Suzanne, Innovation and Incentives, MIT Press, 2004, Chapters 1-8.
- Friedman, David D., William M. Landes, and Richard A. Posner, "Some Economics of Trade Secret Law," Journal of Economic Perspectives 5(1), Winter 1991, 61-72.
- *Kremer, Michael, "Patent Buyouts: A Mechanism for Encouraging Innovation," Quarterly Journal of Economics 113(4), November 1998, 1137-67. (A prominent paper discussed briefly by Scotchmer.)
- *Brynjolfsson, Erik, and Xiaoquan (Michael) Zhang, "Innovation Incentives for Information Goods," Innovation Policy and the Economy, 7, 2006, 99-123. (An interesting idea for a way to charge for digital music and similar collections.)
B. Problems with the Current U.S. Patent System [3/28, 3/31]
- Jaffe, Adam B., and Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation and Progress, and What to Do about It," Princeton University Press, 2004, Chapters 1-4, and 7.
- Reitzig, Markus, Joachim Henkel, and Christopher Heath, "On Sharks, Trolls, and their Patent Prey---Unrealistic Damage Awards and Firms' Strategies of 'Being Infringed,'" Research Policy, 36(1), January 2007,134-154.
C. The Anti-Commons Hypothesis [4/2]
- Heller, Michael A., and Rebecca S. Eisenberg, "Can Patents Deter Innovation? The Anticommons in Biomedical Research," Science, New Series, 280(5364), 1 May 1998, 698-701.
- Murray, Fiona, and Scott Stern, "When Ideas Are Not Free: The Impact of Patents on Scientific Research," Innovation Policy and the Economy, 7, 2006, 33-69. (As of late January, this issue has not yet been added to the Ebsco online collection accessible through the library. I'll check again as the date of reading approaches.)
- Walsh, John P., Wesley M. Cohen, and Charlene Cho, "Where Excludability Matters: Material versus Intellectual Property in Academic Biomedical Research," Research Policy, 36(8), 1184-1203.
- *Walsh, John P., Charlene Cho, and Wesley M. Cohen, "View from the Bench: Patents and Materials Transfers," Science, New Series, 309(5743), 23 September 2005, 2002-03. (An earlier paper that is often cited.)
- *Maurer, Stephen M., "Inside the Anticommons: Academic Scientists' Struggle to Build a Commercially Self-Supporting Human Mutations Database, 1999-2001," Research Policy, 35(6), July 2006, 839-853.
D. The Economics of Open-Source Software [4/4]
- Lerner, Josh, and Jean Tirole, "Some Simple Economics of Open Source," Journal of Industrial Economics 50(2), June 2002, 197-234. (Available online through Reed Library catalog.)
- Comino, Stefano, Fabio M. Manenti and Maria Laura Parisi, "From Planning to Mature: On the Success of Open Source Projects," Research Policy 36(10), December 2007, 1575-86.
- *Lerner, Josh, and Jean Tirole, "The Economics of Technology Sharing: Open Source and Beyond," National Bureau of Economic Research Working Paper #10956, December 2004. (A more recent discussion by the same authors.)
- *Bonaccorsi, Andrea, and Cristina Rossi, "Why Open Sources Software Can Succeed," Research Policy 32(7), 2003, 1243-58. (This entire issue of Research Policy is devoted to papers on open-source software.)
- *Gambardella, Alfonso, and Bronwyn H. Hall, "Proprietary versus Public Domain Licensing of Software and Research Products," Research Policy, 35(6) July 2006, 875-892.
A. Path Dependence: Examples and Counterexamples [4/14 and 4/16]
- David, Paul A., "Clio and the Economics of QWERTY," American Economic Review 75(2), May 1985, 332-337. (The classic reading on path dependence.)
- Arthur, W. Brian, Increasing Returns and Path Dependence in the Economy, University of Michigan Press, 1994, Chapter 1: "Positive Feedbacks in the Economy" and Chapter 2: "Competing Technologies, Increasing Returns, and Lock-In by Historical Small Events." (Arthur has become a leader in modeling path-dependent processes. These chapters introduce the ideas that are developed in the remainder of his very interesting book.)
- Cowan, Robin, "Nuclear Power Reactors: A Study in Technological Lock-In," Journal of Economic History 50(3), September 1990, 541-567. (Another possible example of path dependence.)
- Liebowitz, S. J., and Stephen E. Margolis, "The Fable of the Keys," Journal of Law and Economics 33(1), April 1990, 1-25. (Debunks David's evidence.)
B. Networks, Standards, and Externalities [4/18]
- Katz, Michael L., and Carl Shapiro, "Systems Competition and Network Effects," Journal of Economic Perspectives 8(2), Spring 1994, 93-115. (Network externalities and competition for standard setting from an economic perspective.)
- Besen, Stanley M., and Joseph Farrell, "Choosing How to Compete: Strategies and Tactics in Standardization," Journal of Economic Perspectives 8(2), Spring 1994, 117-131. (A firm-management perspective on network industries.)
- Liebowitz, S. J., and Stephen E. Margolis, "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives 8(2), Spring 1994, 133-150. (Do network externalities really exist?)