Endogenous Economic Growth with Disembodied Knowledge

17 Pages Posted: 5 Dec 2015

See all articles by Carla Marchese

Carla Marchese

Università del Piemonte Orientale "Amedeo Avogadro", Institute POLIS-DiGSPES

Fabio Privileggi

University of Turin - Department of Economics and Statistics

Date Written: December 4, 2015

Abstract

Mainstream endogenous growth models assume that new knowledge is embodied into new intermediate or final goods, monopolistically supplied by the patent holder. Recent technological progress, however, often gives rise to pure intellectual contents, such as software codes or business models, directly usable in the production of final goods. Once a content of this type has been produced, it is in fixed supply, that is, the inventor can only rent it out (or sell it) or not; hence the quantity restriction typical of monopoly cannot arise, while competition is viable (Chantrel et al., 2012; Marchese and Privileggi, 2014). We show that, however, as long as the inventor owning a patent can control through licence activation devices the access to the intellectual content of the workers using her invention in the final goods production, monopolistic exploitation becomes viable and will occur. It turns out that in this framework both the level of wages and of consumption and the rate of growth of the economy are smaller than in the first best, while with elastic labor supply also labor employment is negatively impacted. This implies that some standard public policies devised for correcting inefficiencies in development can perform poorly in this framework.

Keywords: Endogenous growth, patent, monopoly, dematerialized knowledge

JEL Classification: C61, E10, O31, O41

Suggested Citation

Marchese, Carla and Privileggi, Fabio, Endogenous Economic Growth with Disembodied Knowledge (December 4, 2015). Available at SSRN: https://ssrn.com/abstract=2699042 or http://dx.doi.org/10.2139/ssrn.2699042

Carla Marchese (Contact Author)

Università del Piemonte Orientale "Amedeo Avogadro", Institute POLIS-DiGSPES ( email )

Via Cavour 84
15100 Alessandria
Italy
+39-131-283718 (Phone)
+39-131-283704 (Fax)

Fabio Privileggi

University of Turin - Department of Economics and Statistics ( email )

Lungo Dora Siena 100 A
Torino, Turin - Piedmont 10153
Italy
+39-011-6702635 (Phone)
+39-011-6703895 (Fax)

HOME PAGE: http://www.unito.it/persone/fabio.privileggi

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