Global Innovation Contests

The primary objective of this paper is to develop a two-country, dynamic, general equilibrium model with innovation contests to formally analyze the impact of globalization on the skill premium and fully-endogenous growth. Higher quality products are endogenously discovered through stochastic and se...

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Bibliographic Details
Published inGames Vol. 14; no. 1; p. 18
Main Authors Dinopoulos, Elias, Syropoulos, Constantinos, Tsoulouhas, Theofanis
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.02.2023
Subjects
barriers to innovation
Economic growth
Equilibrium
Financial services industry
Global economy
Globalization
Growth models
Impact analysis
Income distribution
innovation contests
Innovations
International business enterprises
International economic relations
International trade
Manufacturing
Opportunity costs
R&D
Rankings
rent-protection activities
Research & development
scale effects
Tariffs
Trade restrictions
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Summary:The primary objective of this paper is to develop a two-country, dynamic, general equilibrium model with innovation contests to formally analyze 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, 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.
ISSN:2073-4336
2073-4336
DOI:10.3390/g14010018