Essays
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Innovation - Jaffe, Adam B.
Innovation is the creation and commercial implementation of a new product or process, often (but not necessarily) based on new technology. Innovation is a major source of private business success and competitive advantage, and is the major long‐term source in growth in per capita income in an economy. The innovation process is characterized by a high level of uncertainty, long lead times, and “spillovers” of economic benefits whereby innovators capture only a portion of the benefits created by an innovation. Intellectual property rights such as patents mitigate, but do not completely solve the problem of firms' inability to appropriate all of the benefits of their innovations. As a result, the private incentive to invest in innovation is lower than the social benefit, and so the private economy will invest too little in innovation in the absence of government intervention. Governments in developed economies support innovation both directly and indirectly. -
Technology Diffusion - Jaffe, Adam B.
Technology diffusion is the process by which new technologies are adopted for use across individual firms or households in a given market, and across different markets. The most salient facts about this process are that it always plays out over time, and the time before adoption is widespread varies greatly across technologies. The dominant explanations for gradual adoption are the time needed for information about the technology to diffuse, and heterogeneity among adopters, such that those for whom the benefits of the new technologies adopt first, while those for whom the benefits are less wait until the technology has improved and/or its cost has fallen. Research has focused on the nature of the information diffusion process, and the attributes of firms and households that affect their adoption decisions. Promising areas for new research include the application of insights ad methods from behavioral economics, the linking of formal models to empirical research, the diffusion of technology to less developed countries and its role in economic development, and public policy issues related to technology diffusion in important sectors such as health care and global climate change.