Economic Analysis of Innovation


YARIME, Masaru

Credits / Language / Semester

2Credits / English / Summer


This course discusses the functions and mechanisms of innovation systems and the economic assessment of their impacts, with implications for industrial structure and dynamics and societal challenges. A particular attention is paid to corporate strategy, public policy, and institutional design. Among the issues to be discussed in this course include models of technological change, systems approaches to innovation, research and development, intellectual property rights, university-industry collaboration, public policy for innovation, and case studies in various sectors. The processes of producing, adopting, and utilizing innovations are elaborated from a perspective of co-evolution of technology and institutions. Analysis of economic evolution is introduced, and its concepts and methodologies are elaborated to represent and model the dynamics of innovations. Systemic approaches are taken to discuss the functions and structure of innovations at the national as well as industrial levels. These theoretical frameworks introduced in the first half of the course are utilized to understand the mechanisms of creating innovations on various types of societal issues, including food, energy, chemicals, information and communication, and health. Implications for public policy and institutional design are explored for a transition towards global sustainability.


innovation, research and development, diffusion, technological change, network, university-industry collaboration, science and technology policy, industrial structure, sustainability


1. Innovation and Economic Growth
2. Models of Innovation
3. Diffusion of Technology
4. Industrial Structure and Dynamics
5. Intellectual Property Rights
6. National and Sectoral Systems of Innovation
7. University-Industry-Government Collaboration
8. Economic Assessment of Innovation
9. Innovation Systems on Energy
10. Innovation Systems on Chemicals
11. Innovation Systems on Information and Communication
12. Innovation Systems on Health
13. Science, Technology, and Innovation Policy
14. Environmental Policy and Innovation
15. Innovation and Sustainability

Teaching Methods

Lectures and class discussions


Class Participation: 20%
Mid-term Paper: 40%
Final Paper: 40%

Required Text

Ruttan, Vernon W., Technology, Growth, and Development: An Induced Innovation Perspective, New York: Oxford University Press (2001).
Hall, Bronwyn H., and Nathan Rosenberg, eds., Handbook of the Economics of Innovation, Volume 1 and Volume 2, Amsterdam: Elsevier (2010).

Reference Books

Abramovitz, M. “Catching Up, Forging Ahead and Falling Behind,” Journal of Economic History, 46, 385-406 (1986).
Nelson, Richard R., "Recent evolutionary theorizing about economic change", Journal of Economic Literature, 33 (1), 48-90 (1995).
Breschi, S., Malerba, F. and Orsenigo, L., 2000, "Technological regimes and Schumpeterian patterns of innovation", Economic Journal, 110 (463), 388-410 (2000).
David, Paul, "Clio and the economics of QWERTY", American Economic Review, 75 (2), 332-337 (1985).
Dosi, Giovanni, "Sources, Procedures, and microeconomic effects of innovation", Journal of Economic Literature, XXVI, 1120-1171 (1998).
Utterback, J., and Suarez, F., "Innovation, competition and market structure", Research Policy, 22 (1), 1-21 (1993).
Heller, Michael A., and Rebecca S. Eisenberg, “Can Patents Deter Innovation? The Anticommons in Biomedical Research,” Science, 280 (1 May), 698-701 (1998).
Gallini, Nancy T., “The Economics of Patents: Lessons from Recent U.S. Patent Reform,” Journal of Economic Perspectives, 16 (2), 131-154 (2002).
Forero-Pineda, Clemente, “The Impact of Stronger Intellectual Property Rights on Science and Technology in Developing Countries,” Research Policy, 35, 808-824 (2006).
Fagerberg, Jan, and Srholec, Martin, 2008, "National Innovation systems, capabilities and economic development", Research Policy, 37, 1417-1435 (2008).
Malerba, Franco, "Sectoral systems of innovation and production, Research Policy, 31, 247-264 (2002).
Mowery, David C., Nelson, Richard R., Sampat, Bhaven N., Ziedonis, Arvis A., “The Growth of Patenting and Licensing by U.S. Universities: An Assessment of the Effects of the Bayh-Dole Act of 1980,” Research Policy, 30, 99-119 (2001).
Martin, Ben R., “Are universities and university research under threat? Towards an evolutionary model of university speciation,” Cambridge Journal of Economics, 36 (3), 543-565 (2012).
Baba, Yasunori, Masaru Yarime, and Naohiro Shichijo, "Sources of Success in Advanced Materials Innovation: The Role of 'Core Researchers' in University-Industry Collaboration in Japan," International Journal of Innovation Management, 14 (2), 201-219 (2010).
Martin, J. M., “Energy Technologies: Systemic Aspects, Technological Trajectories, and Institutional Frameworks,” Technological Forecasting and Social Change, 53, 81-95 (1996).
Yarime, Masaru, "Public Coordination for Escaping from Technological Lock-in: Its Possibilities and Limits in Replacing Diesel Vehicles with Compressed Natural Gas Vehicles in Tokyo," Journal of Cleaner Production, 17 (14), 1281-1288 (2009).
Achilladelis, Basil, Schwarzkopf, Albert, and Cines, Martin, “The Dynamics of Technological Innovation: The Case of the Chemical Industry,” Research Policy, 19, 1-34 (1990).
Arora, Ashish, “Patents, Licensing, and Market Structure in the Chemical Industry,” Research Policy, 26, 391-403 (1997).
Yarime, Masaru, “Promoting Green Innovation or Prolonging the Existing Technology: Effects of Environmental Regulation on Technological Change in the Chlor-Alkali Industry in Japan and Western Europe,” Journal of Industrial Ecology, 11 (4), 117-139 (2007).
David, Paul A., “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox,” American Economic Review, 80, 355-361 (1990).
Storz C., "Dynamics in innovation systems: evidence from Japan's game software industry", Research Policy, 37, 1480-1491 (2008).
Cockburn, Iain M., “Is the pharmaceutical industry in a productivity crisis?” Innovation Policy and the Economy, Volume 7, 1-32 (2006).
Philippe Aghion, Paul A. David, and Dominique Foray, “Science, technology and innovation for economic growth: Linking policy research and practice in ‘STIG Systems’,” Research Policy, 38, 681-693 (2009).
Porter, Michael, and Claas van der Linde, “Toward a New Conception of the Environment-Competitiveness Relationship,” Journal of Economic Perspectives, 9 (4), 97-118 (1995).
Palmer, Karen, Wallace E. Oates, and Paul R. Portney, “Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?” Journal of Economic Perspectives, 9 (4), 119-132 (1995).
Kemp, Rene, and Pontoglio, Serena, “The Innovation Effects of Environmental Policy Instruments - A Typical Case of the Blind Man and the Elephant?” Ecological Economics, 72, 28-36 (2011).
Pablo del Rio, Javier Carrillo-Hermosilla, and Totti Knnola, “Policy Strategies to Promote Eco-Innovation: An Integrated Framework,” Journal of Industrial Ecology, 14 (4), 541-557 (2010).
Mowery, David C., Nelson, Richard R., and Martin, Ben R., “Technology policy and global warming: Why new policy models are needed (or why putting new wine in old bottles won't work),” Research Policy, 39, 1011-1023 (2010).
Rennings K., "Redefining innovation - eco-innovation research and the contribution from ecological economics", Ecological Economics, 32, 319-332 (2000).
Nill, Jan, and Rene Kemp, “Evolutionary approaches for sustainable innovation policies: From niche to paradigm?” Research Policy, 38, 668-680 (2009).
Smith, Adrian, Voss, Jan-Peter, and Grin, John, “Innovation studies and sustainability transitions: The allure of the multi-level perspective and its challenges,” Research Policy, 39, 435-448 (2010).
Jacobsson, Staffan, and Bergek, Anna, “Innovation system analyses and sustainability transitions: Contributions and suggestions for research,” Environmental Innovation and Societal Transitions, 1 (1), 41-57 (2011).

Related Resources