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Title: Speculative Profits, Innovation and Growth
Authors: Zanchettin, Piercarlo
Denicolo, Vincenzo
First Published: 4-Jul-2016
Publisher: Wiley
Citation: Economic Inquiry, 2017, 55 (1), pp. 160-174
Abstract: When 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.
DOI Link: 10.1111/ecin.12375
ISSN: 0095-2583
eISSN: 1465-7295
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Copyright © 2016 Wiley. Deposited with reference to the publisher’s archiving policy available on the SHERPA/RoMEO website.
Description: 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.
Appears in Collections:Published Articles, Dept. of Economics

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