s1-ln22185792-4584751791703867393Hwf769038739IdV70569086722185792FIRST_LOOK_PDF0001.pdf (242.09 kB)
Speculative Profits, Innovation and Growth
journal contribution
posted on 2016-06-14, 10:39 authored by Piercarlo Zanchettin, Vincenzo DenicoloWhen technological change affects the prices of tradeable assets, innovators can obtain speculative profits by exploiting their inside information as to the occurrence of innovations. We propose a tractable model of endogenous growth that formalizes this argument, originally due to Hirshleifer (1971). We then use the model to assess two claims advanced by Hirshleifer, namely, that speculative profits can generate excessive investment in R&D when they add to monopoly rents guaranteed by patent protection, or else even in a perfectly competitive economy. The analysis confirms the first claim, but casts doubts on the second one.
History
Citation
Economic Inquiry, 2017, 55 (1), pp. 160-174Author affiliation
/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/Department of EconomicsVersion
- AM (Accepted Manuscript)