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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.
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Citation
Economic Inquiry, 2017, 55 (1), pp. 160-174Author affiliation
/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/Department of EconomicsVersion
- AM (Accepted Manuscript)
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Economic InquiryPublisher
Wileyissn
0095-2583eissn
1465-7295Acceptance date
2016-05-05Copyright date
2016Available date
2018-07-04Publisher DOI
Publisher version
http://onlinelibrary.wiley.com/doi/10.1111/ecin.12375/abstractNotes
The file associated with this record is under a 24-month embargo from publication in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.Language
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