We study the optimal design of R&D policies and corporate taxation when the outputs of innovation are not appropriable in the absence of intellectual property rights policies and there are non-internalized technology spillovers across firms. Firms are heterogeneous in their research productivity, i.e., in the efficiency with which they convert a given set of R&D inputs into successful innovations. There is asymmetric information about firm productivity and about its stochastic evolution over time that prevents the first best solution to the technology spillover. The problem is thus posed as one of dynamic mechanism design with externalities. We characterize the optimal constrained efficient allocations over firms' life cycles and for firms of different productivities. We show that the constrained efficient allocations can be implemented either by a patent system plus a price subsidy for the monopolists' products, together with a parsimonious R&D subsidy function or, equivalently, by a prize mechanism. We estimate our model using firm-level data matched to patent data and quantify the optimal policies. Simpler innovation policies, such as linear R&D subsidies and linear profit taxes, lead to large revenue losses relative to the optimal mechanism.

This paper investigates the impact of infrastructure on innovation collaboration between enterprises in different locations using the introduction of high-speed railways in China. Applying an instrumental variable approach to control for the endogeneity of high-speed railways, and using a large enterprise census that includes both manufacturing and service sectors in China, we find that high-speed railways can improve innovation collaboration substantially at the city level. More importantly, we match city pairs based on high-speed railway routes and calculate the amount of time saved by a high-speed railway for each city pair. The empirical results suggest that the innovation collaboration also increases significantly at the city-pair level. Innovation quality, measured by patent citations between cities, also increases. Further evidence on spatial heterogeneity, industry heterogeneity and ownership heterogeneity suggests that the impact of high-speed railways is more significant for collaboration in less developed regions, in the service sector and in domestic enterprises.

This paper introduces a general equilibrium model of endogenous technical change through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that standard innovation policies (e.g., uniform R&D tax credits) can accentuate the dynamic misallocation in the economy by oversubsidizing applied research. Policies geared towards public basic research and its transmission to the private sector are significantly welfare improving.

We assess the rate of replication for empirical papers in the 2010 American Economic Review. Across seventy empirical papers, we find that 29 percent have one or more citation that partially replicates the original result. While only a minority of papers has a published replication, a majority (sixty percent) have either a replication, robustness test or an extension. Surveying authors within the literature we find substantial uncertainty over the number of extant replications.

We develop an endogenous growth model where clean and dirty technologies compete in production. Research can be directed to either technology. If dirty technologies are more advanced, the transition to clean technology can be difficult. Carbon taxes and research subsidies may encourage production and innovation in clean technologies, though the transition will typically be slow. We estimate the model using microdata from the US energy sector. We then characterize the optimal policy path which heavily relies on both subsidies and taxes. Finally we evaluate various alternative policies. Relying only on carbon taxes or delaying intervention have significant welfare costs.

As the largest encyclopedia in the world, it is not surprising that Wikipedia reflects the state of scientific knowledge. However, Wikipedia is also one of the most accessed websites in the world, including by scientists, which suggests that it also has the potential to shape science. This paper shows that it does.

Incorporating ideas into Wikipedia leads to those ideas being used more in the scientific literature. We provide correlational evidence of this across thousands of Wikipedia articles and causal evidence of it through a randomized control trial where we add new scientific content to Wikipedia. We find that the causal impact is strong, with Wikipedia influencing roughly one in every ∼830 words in related scientific journal articles. We also find causal evidence that the scientific articles referenced in Wikipedia receive more citations, suggesting that Wikipedia complements the traditional journal system by pointing researchers to key underlying scientific articles.

Our findings speak not only to the influence of Wikipedia, but more broadly to the influence of repositories of scientific knowledge and the role that they play in the creation of scientific knowledge.

This paper explores key features of China’s patent system, embedding them in a growth model that allows us to explore their consequences for long-run innovation, economic growth, and welfare. We first show that China’s system is characterized by narrow patent protection, reflecting three key features: a strong bias towards incremental innovation, weak patent enforcement, and a decline in the quality of patent examination. Based on these stylized facts, we build a growth-theoretic model to show how narrow patent protection distorts innovation incentives. By skewing R&D efforts toward "incremental" innovation, China’s patent system slows technological progress and lowers national economic growth. These results suggest that strengthening patent infringement damage awards and raising patent application fees could significantly accelerate China’s economic and technological progress.

We study the prevalence and implications of firms' strategic practices to patent but not commercialize new ideas. We develop a model illustrating that market leaders have higher incentives to use these practices, and we create a novel data set linking patents to products to evaluate the model's implications. We find that the degree of association between patent and product introduction is positive, on average, but smaller for market leaders. Patents of market leaders generate larger revenue premiums and greater deterrence of future product introduction by competitors, which is also consistent with leaders' strategic use of patents. Using the model, we quantify that 62% of patents do not lead to product introductions. These patents imply a 2.5% reduction in the rate of creative destruction. Our counterfactuals under different patent regimes indicate that the possibility of obtaining patent protection without product commercialization also reduces market leaders' innovation efforts, potentially reversing the benefits of the patent system as a whole.

Economic analysis of effective policies for managing epidemics requires an integrated economic and epidemiological approach. We develop and estimate a spatial, micro-founded model of the joint evolution of economic variables and the spread of an epidemic. We empirically discipline the model using new U.S. county-level data on health, mobility, employment outcomes, and non-pharmaceutical interventions (NPIs) at a daily frequency. Absent policy or medical interventions, the model predicts an initial period of exponential growth in new cases, followed by a protracted period of roughly constant case levels and reduced economic activity. Nevertheless, if vaccine development proved impossible, and suppression cannot entirely eradicate the disease, a utilitarian policymaker cannot improve significantly over the laissez-faire equilibrium by using lockdowns. Conversely, if a vaccine will arrive within two years, NPIs can improve upon the laissez-faire outcome by dramatically decreasing the number of infectious agents and keeping infections low until vaccine arrival. Mitigation measures that reduce viral transmission (e.g., mask-wearing) both reduce the virus's spread and increase economic activity.

There is substantial heterogeneity across industries in the level of interdependence between new and old technologies. I propose a measure of this interdependence—an index of sequentiality in innovation—which is the transfer rate of patents in a particular industry. I find that highly sequential industries have higher profitability, higher variance of firm growth, lower exit rates, and lower rates of patent expiry. To better understand these trends, I construct a model of firm dynamics where the productivity of firms evolves endogenously through innovations. New innovators either replace existing technologies or must purchase the rights to existing technologies from incumbents in order to produce, depending on the level of sequentiality in the industry. Estimating the model using data on US firms and recent data on US patent transfers, I can account for a large fraction of the cross-industry trends described above. Because innovation results in larger monopoly distortions in more sequential industries, there is an overinvestment of research inputs into these industries. This misallocation, which amounts to 2.5% in consumption equivalent terms, can be partially remedied using a patent policy featuring weaker protection in more sequential industries, producing welfare gains of 1.7%.