Global Innovation Contests

Elias Dinopoulos, Constantinos Syropoulos () and Theofanis Tsoulouhas

No 10230, CESifo Working Paper Series from CESifo

Abstract: This paper develops a two-country, dynamic general equilibrium model with innovation contests to study the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and sequential global innovation contests in which challengers devote resources to R&D to discover new products while technology leaders undertake rent-protection activities (RPAs) to prolong the expected duration of their temporary monopoly power by hindering the R&D effort of challengers. The model generates intra-sectoral trade, multinationals, and international outsourcing of investment services. Globalization, captured by a move from autarky to the integrated-world equilibrium, leads to convergence of wages and growth rates. Globalization and long-run growth are either substitutes or complements depending on a country’s relative skill abundance and the ranking of skill intensities between RPAs and R&D services. Trade openness between two countries that possess identical relative skill endowments but differ in size does not affect either country’s long-run growth.

Keywords: innovation contests; economic growth; scale effects; R&D; rent-protection activities; barriers to innovation; wage premium (search for similar items in EconPapers)
JEL-codes: F10 F30 F40 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-dge, nep-gro and nep-int
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Citations: View citations in EconPapers (2)

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Journal Article: Global Innovation Contests (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10230

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