ECON 318 Syllabus
Spring 2012, Prof. Christiaan Hogendorn
Course policies webpage          Research Interests File

Checked readings and assignments are required.
Unchecked readings are extra background.

I. Introduction
1. Organization
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2. Schumpeterian Competition
Main points: Schumpeterian, Smithian, and Routinized models of innovation
Icebreakers
Nakamura, Leonard, Economics and the New Economy: The Invisible Hand Meets Creative Destruction, Business Review Federal Reserve Bank of Philadelphia, July/August 2000. pp. 15-30.
History Assignment

Nelson, Richard, "Schumpeter and Contemporary Research on the Economics of Innovation," Chapter 3 in The Sources of Economic Growth, Harvard University Press, 1996: 87-99.
Baumol, William, Chapter 3 in The Free Market Innovation Machine, Free Press, 2002.
*Kohn, Meir, and John Scott, "Scale Economies in Research and Development: The Schumpeterian Hypothesis," Journal of Industrial Economics, Vol. 30, No. 3, March, 1982, pp. 239-249.
 
3. Market Failures
Main points: suboptimal incentives for innovation, lower monopoly incentive, drastic versus non-drastic innovations
*Arrow, Kenneth, "Economic Welfare and the Allocation of Resources for Invention," in Richard Nelson, ed., The Rate and Direction of Inventive Activity, Princeton University Press, 1962, pp. 609-625.
*Theory Assignment (presenters: Clement, Kevin)
 
4. Network Externalities
Main points: direct versus indirect network effects
Jeffrey Rohlfs, "Early Telephone" and "VCRs," Chapters 7 and 10 in Bandwagon Effects, MIT Press, 2001.
History Assignment (presenters: Cyprian, Nick S.)
Handout
 
II. Technological Revolutions
5. The Revolution Paradigm
Main points: general purpose technologies
Nef, J. U., "Coal Mining and Utilization," Chapter 3 in Volume III of Singer et al, eds., A History of Technology, OUP, 1957.
History Assignment (presenters: Chris, Stan)

Mokyr, Joel, "The Industrial Revolution and Beyond," Chapter 3 in The Gifts of Athena, Princeton University Press, 2002: 78-118.
Mokyr, Joel, "Innovation in an Historical Perspective: Tales of Technology and Evolution," Chapter 2 in Steil, Benn, David Victor, and Rochard Nelson, eds., Technological Innovation and Economic Performance, Princeton University Press, 2002: 23-46.
Bresnahan, Timothy, and M. Trajtenberg, "General Purpose Technologies 'Engines of Growth'?" Journal of Econometrics, Vol. 65, 1995, pp. 83-108.
DeLong, J. Bradford, and Lawrence Summers, "The 'New Economy': Background, Historical Perspective, Questions, and Speculations," in Economic Policy for the Information Economy Federal Reserve Bank of Kansas City, 2001, pp. 11-63.

6. The Industrial Revolution
Koehn, Nancy, “Josiah Wedgwood and the First Industrial Revolution,” Chapter 2 in Thomas McCraw, ed., Creating Modern Capitalism, Harvard University Press, 1995.
History Assignment (presenters: Brett, Andrew, Tom)

Rosenberg, Nathan, "The Historiography of Technical Progress," Chapter 1 in Inside the Black Box: Technology and Economics, Cambridge University Press, 1982: 3-33.
Ashton, T. S., The Industrial Revolution: 1760-1830, Oxford University Press, 1948.

7. Inequality, Discontent, Marx
Boyer, George "The Historical Background of the Communist Manifesto," Journal of Economic Perspectives, 12(4), 1998: 151-174.
William Blake, "And Did Those Feet in Ancient Time," preface to Milton, 1808. (source of the line "dark Satanic mills")
History Assignment (presenters: Huong, Rachel, Shayoni)
 
Rosenberg, Nathan, "Marx as a Student of Technology," Chapter 2 in Inside the Black Box: Technology and Economics, Cambridge University Press, 1982: 34-54.
Ashton, T. S., "Capital and Labour," Chapter 4 in The Industrial Revolution: 1760-1830, Oxford University Press, 1948: 94-126.

8. The Second Industrial Revolution
Main point: organizational capabilities and economies of scope are at least as important as technology itself.
Chandler, Alfred, "Creating Organizational Capabilities: The Great Industries [of Germany]," Chapter 12 in Scale and Scope: the Dyanimics of Industrial Capitalism, Harvard University Press, 1990: 456-502.
History Assignment (presenters: David, Mark, Trevor)
Watch Introduction: Welcome, Part 1: all, and Part 2: all of WordPress 3 Essential Training.
 
Rosenberg, Nathan, "Technological Interdependence in the American Economy," Chapter 3 in Inside the Black Box: Technology and Economics, Cambridge University Press, 1982.
Nye, David, "Flexible Factory," Chapter 5 in Electrifying America, MIT Press, 1990: 185-237.
Fear, Jeffrey, "German Capitalism," Chapter 5 in McCraw, Thomas, ed., Creating Modern Capitalism, Harvard University Press, 1995: 133-182.
Perelman, Michael, "Retrospectives: Fixed Capital, Railroad Economics and the Critique of the Market," Journal of Economic Perspectives, 8(3), 1994: 189-195.

9. The ICT Revolution and Clean Tech
Companies to be discussed: Genomatica: http://www.genomatica.com/, Amyris: http://www.amyris.com/, Elevance: http://www.elevance.com/, Beta Renewables: http://www.betarenewables.com/, Alphabet Energy: http://alphabetenergy.com/.
Gordon Moore and Kevin Davis, "Learning the Silicon Valley Way," chapter 2 in Bresnahan and Gambardella, eds., Building High-Tech Clusters : Silicon Valley and Beyond, 2004: 7-39.
History Assignment (presented by Cat, Jordan, Walter on Tuesday 2/28)

Mowery, David and Timothy Simcoe, "Is the Internet a US invention?—an economic and technological history of computer networking," Research Policy, 31, 2002.
Olegario, Rowena, "IBM and the Two Thomas J. Watsons," Chapter 10 in Thomas McCraw, ed., Creating Modern Capitalism, Harvard University Press, 1995.
Langlois, Richard "Computers and Semiconductors," Chapter 10 in Steil, Benn, David Victor, and Rochard Nelson, eds., Technological Innovation and Economic Performance, Princeton University Press, 2002: 265-284.
Nelson, Richard, "The Link Between Science and Invention: The Case of the Transistor," Chapter 7 in The Sources of Economic Growth, Harvard University Press, 1996.

III. Finance and Investment
10. Entrepreneurship
Main points: high-ability people (or more innovative people, or higher-tech capital) will try to spread their capabilities across larger firms and across sectors with higher output elasticity.
*Murphy, Kevin, Andrei Shleifer, and Robert Vishny, "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, 106(2), 1991: 503-530.
*Theory Assignment (presenters: Brett, Andrew, Tom)

Baumol, William, Chapter 5 in The Free Market Innovation Machine, Free Press, 2002.
 
11. Public Support of R&D
*Gelabert, Fosfuri, and Tribó. "Does the Effect of Public Support for R&D Depend on the Degree of Appropriability?" The Journal of Industrial Economics 57(4): 736-767. (*Presentation)
*Theory Assignment (presenters: Huong, Rachel, Shayoni)
Watch Part 3: “Editing…,” “Creating…,” and “Advanced…” of WordPress 3 Essential Training.

Baumol, Chapter 9 and 10.
Berndt, Ernst, "Pharmaceuticals in U.S. Health Care: Determinants of Quantity and Price," Journal of Economic Perspectives, 16(4), 2002: 45-66.
Kremer, Michael, "Pharmaceuticals and the Developing World," Journal of Economic Perspectives, 16(4), 2002: 67-90
Teece. Profiting from technological innovation: Implications for integration, collaboration, …. Research policy (1986)

12. Finance and Bubbles
Carlota Perez, "Financial Capital and Production Capital," Chapter 7 in Technological Revolutions and Financial Capital, Edward Elgar, 2002: 71-80.
History Assignment (presenters: Adam, Matt, Sam)
Watch Part 4: “Understanding…” and “Advanced…” (and perhaps the other episodes, but they  seem fairly self-explanatory) of WordPress 3 Essential Training.

*Pástor and Veronesi. Technological revolutions and stock prices. American Economic Review (2009)
Ghossoub, E. and Beladi, H. (2010). Technological diffusion and asset prices. Economics Letters.
*Jovanovic, Boyan and Peter Rousseau, "Mergers as Reallocation," NBER Working Papers 9279, 2002.
Perez, Carlota, "The Sequence and its Driving Forces," Chapter 14 in Technological Revolutions and Financial Capital, Edward Elgar, 2002: 151-158.

13. Technology Presentations

SPRING BREAK
 
IV. Intellectual Property and Spillovers
14. Intellectual Property
Carl Shapiro, 2001, “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting,” in Jaffe, A.B., Lerner, J., and Stern, S. (eds.), Innovation Policy and the Economy, 1, 2001, pp. 119-150.
History Assignment (presenters: Clement, Linran, Kevin)
 
15. Competition and Innovation
Main point: firms can either be in “neck-and-neck” competition, or in an “unleveled” leader-follower relationship. When in “neck-and-neck,” there is a strong motivation to escape competition through R&D. The degree of this competition affects R&D incentives.
*Aghion, P., Bloom, N., Blundell, R., Griffith, R., and Howitt, P. (2005). Competition and innovation: An inverted-u relationship. The Quarterly Journal of Economics, 120(2).
*Theory Assignment (presenters: Trevor, Mark, David)

Peneder, M., 2012. Competition and Innovation: Revisiting the Inverted-U Relationship. Journal of Industry, Competition and Trade, 12(1), pp.1-5. and following articles in special issue.
Kamien, Morton, and Nancy Schwartz, "Schumpeterian Hypotheses," Chapter 2 in Market Structure and Innovation, Cambridge University Press, 1982: 22-48.
Vives, X. (2008). Innovation and competitive pressure. Journal of Industrial Economics, 56(3):419–469.
 
16. Cumulativeness and Externalities
*Green and Scotchmer. "On the division of profit in sequential innovation." The RAND Journal of Economics (1995)
*Theory Assignment (presenters: Chris, Linran, Stan)

Scotchmer, Chapter 5
 
17. Technology Sharing and Consortia
Main points: R&D spillovers increase the socially optimal R&D intensity. Allowing firms to collude may even be socially optimal for very high spillovers.
*d’Aspremont, C. and Jacquemin, A. (1988). Cooperative and noncooperative R & D in duopoly with spillovers. American Economic Review, 78(5): 1133–1137.
*Theory Assignment (presenters: Jason, Jeremy)

*Lars-Hendrik Roller, Ralph Siebert and Mihkel M. Tombak, “Why Firms Form (or do not Form) RJVs,” The Economic Journal, 117: 1122-1144.
*Josh Lerner, Marcin Strojwas and Jean Tirole, “The Design of Patent Pools: The Determinants of Licensing Rules,” Rand Journal of Economics, forthcoming
*Baumol, Chapter 13.
 
18. Clusters, Spillovers, External Economies
*Ellison, G., Glaeser, E., and Kerr, W. (2010). “What causes industry agglomeration? evidence from coagglomeration patterns.” American Economic Review, 100:1195–1213.
*Theory Assignment (presenters: Adam, Matt, Sam)

Buzard, Kristy, and Carlino, Gerald, "The Geography of Research and Development Activity in the U.S." Federal Reserve Bank of Philadelphia Business Review, Third Quarter 2008.
Timothy Bresnahan and Alfonso Gambardella, "Old-Economy Inputs for New-Economy Outcomes : What Have We Learned?" chapter 2 in Bresnahan and Gambardella, eds., Building High-Tech Clusters : Silicon Valley and Beyond, 2004: 331-358.
Catherine de Fontenay and Erran Carmel, “Israel’s Silicon Wadi: The Forces Behind Cluster Formation,” Chapter 3 in Timothy Bresnahan and Alfonso Gambardella, eds., Building High Tech Clusters, Cambridge, 2004.
 
19. Compatibility and Standards
*Arthur, W. Brian, "Competing Technologies, Increasing Returns, and Lock-in by Historical Events," Economic Journal, 99(1), 1989: 116-131.
*Theory Assignment (presenters: Cyprian, Nick)

Thomas Eisenmann, Geoffrey Parker, Marshall Van Alstyne, "Platform Envelopment," SSRN working paper, 2007.
Bresnahan, Timothy, and Shane Greenstein, "Technological Competition and the Structure of the Computer Industry," Journal of Industrial Economics, 47(1), 1999: 1-40.
Puffert, Douglas, "The Standardization of Track Gauge on North American Railways, 1830-1890," The Journal of Economic History, Vol. 60, No. 4, December 2000, pp. 933-960.
*Cremer, Jacques, Patrick Rey, and Jean Tirole, "Connectivity on the Commercial Internet," Journal of Industrial Economics, Vol. 48, No. 4, December 2000, pp. 433-472. (Only read through the end of section IV.)
 
20. Open Source
Raymond, Eric, The Cathedral and the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary, Chapter 2 "A Brief History of Hackerdom" and Chapter 3 "The Cathedral and the Bazaar."
History Assignment (presenters: Jason, Jeremy)

Josh Lerner and Jean Tirole, "Some Simple Economics of Open Source," Journal of Industrial Economics, 50(2), 2002: 197-234.
Josh Lerner and Jean Tirole, "The Economics of Technology Sharing: Open Source and Beyond," Journal of Economic Perspectives, 19(2), 2005: 99-120.
Yochai Benkler, “Some Basic Economics of Information Production and Innovation,” “Peer Production and Sharing,” and “The Economics of Social Production,” Chapters 2, 3, and 4 in The Wealth of Networks, Yale University Press, 2006.

V. Macroeconomic Growth
21. Productivity and Growth
*Syverson, C. (2011). What determines productivity? Journal of Economic Literature, 49(2):326–365.
*Theory Assignment (presenters: Harley)

*Baumol, Chapter 15, especially appendix on Cost Disease.

22. Growth Empirics
Jorgenson, D.W., Ho, M.S. & Samuels, J.D., 2011. Information technology and U.S. productivity growth: evidence from a prototype industry production account. Journal of Productivity Analysis, 36(2), pp.159-175.
History Assignment (presenters: Ben, Harley)

David, Paul, “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox,” American Economic Review Papers and Proceedings, 80(2), 1990: 355-361.
 
23. Feedback and Cardwell's Law
*Arnold C. Harberger, “A Vision of the Growth Process,” American Economic Review, March, 1998: 1-32.
*Theory Assignment (presenters: Ben, Cat, Jordan, Walter)

Mokyr, Joel, "The Political Economy of Knowledge: Innovation and Resistance in Economic History," Chapter 6 in The Gifts of Athena, Princeton University Press, 2002: 78-118.
Baumol, Chapter 16.

VI. Perspectives on Technologies

Technology Website Presentations 1
Technology Website Presentations 2
Technology Website Presentations 3