Economics of Innovation (in English)

Intermediate Micro-Economics and Introductory Industrial Organization

The course aims at analysing the mechanisms and institutions governing the production, use and diffusion of information and knowledge. It also aims at developing a rigorous economic analysis of a large set of issues surrounding intellectual property, R&D and innovation. In this field, the economic approach appears as fundamental as it focuses on markets, incentives and strategic interaction.

Having regard to the LO of the programme, this activity contributes to the development and acquisition of the following LO:

• 1. Corporate citizenship
• 1.1. 'Demonstrate independent reasoning, look critically  '
• 2. Knowledge and reasoning
• 2.1. Master  the core knowledge  of each  area  of management.
• 2.2. Master  highly specific  knowledge   '
• 2.3. Articulate the acquired knowledge  from different areas
• 2.4. Activate and apply the acquired knowledge  '
• 3. A scientific and systematif approach
• 3.1. Conduct a clear,  structured, analytical  reasoning '
• 3.2. Collect, select  and  analyze  relevant  information   '
• 3.3.Consider  problems using  a  systemic and  holistic  approach  '
• 3.4. Perceptively  synthesize  'demonstrating a certain  conceptual distance '
• 3.5.Produce, through  analysis  and  diagnosis, implementable solutions'
• 5. Work effectively in an international and multicultural environment
• 5.2.Position ... the functioning  of an organization, in its ...socio-economic dimensions'
• 6. Teamwork and leadership
• 6.1. Work in a team...
• 8. Communication and interpersonal skills
• 8.1. Express a clear and structured message'
• 8.2. Interact  and  discuss effectively  '
• 9. Personal and professional development
• 9.1. Independent self-starter  '
• 9.4. Quick study, lifelong learner '

At the end of this course, the student will be able to:

1. understand what sets innovation markets apart from other markets.
2. understand why markets often fail when it comes to produce information and knowledge.
3. understand why and how governments should intervene in such markets.
4. use the economic analysis in order to improve their understanding of a number of topical issues (e.g., the impact of patents and generic drugs on the fight against diseases like HIV/AIDS or malaria, software patents, piracy of digital goods, etc).

The contribution of this Teaching Unit to the development and command of the skills and learning outcomes of the programme(s) can be accessed at the end of this sheet, in the section entitled “Programmes/courses offering this Teaching Unit”.

Class participation and oral examination, in French or English

The theoretical material is presented during the lectures. Students are asked to work in groups in order to apply the theoretical framework to specific case studies and/or to topical issues.

In-class activities

• Lectures

At home activities

• Readings to prepare the lecture
• Paper work
• Students presentation

Summary, content and methods

1.  We introduce the main concepts and explain why activities generating information and knowledge are marred by three sources of market failures, which contribute to create a generic problem of appropriability.
2. We compare various public policy measures that are designed to alleviate this problem of appropriability.
3. We assess the effect of market structure on the incentives for R&D.
4. We study how patent protection should optimally be designed. In particular, we address the questions of the optimal length and breadth of patents.
5. We apply the previous general analyses to the specificities of the digital economy. Two topical issues are addressed: the piracy of digital products and the development of open-source software.

Content

• Information and appropriability
• Market structure and incentives for R&D
• Patents and efficiency
• Intellectual property in the digital economy

References : Provided during the class

Lecture notes and Slides provided through Moodle

Internationalisation

• international case study