Global Innovation Contests

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10230

Classification and Topics

• Classification: Wirtschaft ; Trade: General ; International Finance: General ; Macroeconomic Aspects of International Trade and Finance: General
• Subject: innovation contests ; economic growth ; scale effects ; R&D ; rent-protection activities ; barriers to innovation ; wage premium

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dinopoulos, Elias ; Syropoulos, Constantinos ; Tsoulouhas, Theofanis
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/271874
• Last update: 10.03.2025, 11:42 AM CET