The Economics of Innovation and Technology

The Economics of Innovation and Technology is a specialized field that analyzes the creation, diffusion, and economic impact of new knowledge and technologies. Central to this area is the understanding of knowledge as a public good, which creates a core market failure: firms may underinvest in research and development (R&D) because the benefits of their discoveries can be easily copied. Consequently, the field scrutinizes the role of intellectual property rights, such as patents and copyrights, examining the trade-off between providing temporary monopoly power to incentivize innovation and ensuring the widespread dissemination of new ideas to foster competition. Ultimately, this discipline explores how technological advancement drives productivity, fuels long-run economic growth, reshapes market structures through processes like creative destruction, and informs government policy on everything from R&D subsidies to antitrust regulation in the tech sector.