In this paper, we study the incentives of firms to promote innovation. We analyze a situation in which an employee in a firm is inspired with an idea for a new product. In a framework in which intellectual property rights on ideas are imperfect, we analyze the employee's decision of whether to...

We analyze a model of bargaining over new ideas. The model accounts for the problem of information leakage, i.e., the diffusion of information about the idea before and after the idea is implemented. We analyze the effects of information leakage on the distribution of rents within firms and the...

We analyze a model of bargaining over new ideas. The model accounts for the problem of information leakage, i.e., the diffusion of information about the idea before and after the idea is implemented. We analyze the effects of information leakage on the distribution of rents within firms and the...

We study how complementarities and intellectual property rights affect the management of knowledge workers. The main results relay when a firm will wish to sue workers that leave with innovative ideas, and the effects of complementary assets on wages and on worker initiative. We argue that firms...

The purpose of this paper is to link the propensity for innovative activity to cluster spatially to the stage of the industry life cycle. The theory of knowledge spillovers, based on the knowledge production function for innovative activity, suggests that geographic proximity matters most in...

We review the role of R&D in endogenous growth theory, and describe extant empirical research – macro and micro – bearing on R&D as an engine of growth. Taking R&D to be key, while recognizing the significance of economic incentives, emphasizes knowledge as an economic object and, more...

An upstream firm can license its innovation to downstream firms that have to exert further development effort. There are situations in which more licenses are sold if effort is a hidden action. Moral hazard may thus increase the probability that the product will be developed.