The authors wish to thank the editor and referees for many valuable suggestions and comments and the participants of various seminars for their feedback. Stolyarov gratefully acknowledges the financial support from the National Science Foundation (NSF) SES-0241640. Please address correspondence to: Dmitriy Stolyarov, Department of Economics, University of Michigan, 611 Tappan Ave., 238 Lorch, Ann Arbor, MI 48109-1220. Phone: 734-647-5609; Fax: 734-764-2769. E-mail: email@example.com.
DERIVATIVE IDEAS AND THE VALUE OF INTANGIBLE ASSETS*
Article first published online: 23 JAN 2013
© (2013) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
International Economic Review
Volume 54, Issue 1, pages 59–95, February 2013
How to Cite
Laitner, J. and Stolyarov, D. (2013), DERIVATIVE IDEAS AND THE VALUE OF INTANGIBLE ASSETS. International Economic Review, 54: 59–95. doi: 10.1111/j.1468-2354.2012.00726.x
Manuscript received May 2010; revised January 2012.
- Issue published online: 23 JAN 2013
- Article first published online: 23 JAN 2013
We build a general equilibrium model where growth is driven by two invention types: fundamental ideas that cause creative destruction, and derivative ideas that enhance the value of existing inventions. The model provides a new mapping from microeconomic, patent data to aggregate total factor productivity growth and the aggregate value of privately owned knowledge. We show how to measure the frequency of derivative ideas and the rate of creative destruction. We estimate that derivative ideas account for 70–80% of all patents and their presence more than doubles the value of knowledge capital relative to what the measured innovation rate might otherwise imply.