Abstract
The international market for technology is growing rapidly relative to world GDP. To study the international technology market, I present a model of innovation and international trade in which inventors auction their technology in both domestic and foreign markets. There is monopolistic competition in differentiated products. International trade in technology has number of significant economic effects. Technology trade improves the quality of innovation by increasing the pool of R&D experiments from which the best technology is chosen. Technology trade increases the efficiency of invention while at the same time lowering the total number of inventors relative to the equilibrium without technology trade. Technology trade increases the volume of trade in goods. Technology trade increases product variety at the market equilibrium. Technology trade increases national income in each country and increases total gains from trade.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1-20 |
| Number of pages | 20 |
| Journal | Journal of Economic Theory |
| Volume | 138 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 2008 |
Funding
Elinor Hobbs Distinguished Professor of International Business and Professor of Management Strategy. I thank Jim Brander, Jeffrey Church, Jim Dana, Shane Greenstein, Pedro Mendi, Johannes Moenius, Tom Ross, Barbara Spencer and Scott Stern for helpful comments. I thank seminar participants at Northwestern University, University of Calgary, University of British Columbia, and Indiana University for helpful discussions. I am grateful for research support under a grant from the Searle Fund. I thank the associate editor and two referees for suggestions that greatly improved the paper.
Keywords
- Auctions
- Gains from trade
- International trade
- Invention
- Inventors
- Licenses
- R&D
- Technology
ASJC Scopus subject areas
- Economics and Econometrics