About this event

How much value does a technological innovation create, and how much does it redistribute? We derive general-equilibrium implications of innovation in which a firm?s innovation has three distinct effects: it raises the innovator?s productivity, which propagates to other firms through supply-chain and knowledge-spillover linkages, and destroys value of rivals through business-stealing. The model delivers a multiplier that traces these effects allowing us to distinguish private value, and the aggregate market and welfare effects of the same innovation. We characterize a market-based wedge that shows private value of innovation is not, in general, an ordinal statistic for both market and social value, and R&D policies targeting innovativeness alone may be insufficient at increasing market size and welfare. Our framework provides a tractable decomposition of innovation into creative and reallocative components and yields a market-based measure of innovation externalities that can discipline firm-specific innovation policy.

Participants are expected to adhere to the Events Code of Conduct.

This event will take place in SAL 2.04, 2nd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.