It is well recognized that there are imperfections in the market for knowledge transfer due to the nature of ideas and inventions. This is consistent with market failures commonly discussed in the economics of information literature. Some of the impediments to efficiency axe examined here in three essays—one empirical, one theoretical, and one case study—all of which share the theme of scientific knowledge movement. The first essay is empirical and measures the systematic effects of direct interaction and geographic distance between university and firm scientists on the economic performance of imported inventions. This study concludes that, with respect to licensing royalties, scientific interaction has an elasticity of approximately 3 at the mean, which is highly robust, and that distance does not have a significant effect after controlling for interaction. This suggests imperfections in the market for know-how that are sensitive to distance. The second essay is a case study of an invention from the area of robotics and control systems and augments the empirical work presented in the previous essay by illustrating specific reasons why interaction was important for the commercialization of one particular early stage invention. The third essay develops a game theoretic model involving the strategic manipulation of incentives by an incumbent to create an 'intellectual property commons' for the purpose of preventing the commercial development of a disruptive technology that would otherwise threaten existing industry margins. The strategy of spoiling incentives to commercialize public sector scientific inventions by eliminating exclusive intellectual property rights—the strategy of the commons—is motivated by a fear of cannibalization and supported by a credible threat. It is shown that the degree of cannibalization to which the new technology exposes the old market is responsible for this market failure.

It is well recognized that there are imperfections in the market for knowledge transfer due to the nature of ideas and inventions. This is consistent with market failures commonly discussed in the economics of information literature. Some of the impediments to efficiency axe examined here in three essays—one empirical, one theoretical, and one case study—all of which share the theme of scientific knowledge movement. The first essay is empirical and measures the systematic effects of direct interaction and geographic distance between university and firm scientists on the economic performance of imported inventions. This study concludes that, with respect to licensing royalties, scientific interaction has an elasticity of approximately 3 at the mean, which is highly robust, and that distance does not have a significant effect after controlling for interaction. This suggests imperfections in the market for know-how that are sensitive to distance. The second essay is a case study of an invention from the area of robotics and control systems and augments the empirical work presented in the previous essay by illustrating specific reasons why interaction was important for the commercialization of one particular early stage invention. The third essay develops a game theoretic model involving the strategic manipulation of incentives by an incumbent to create an 'intellectual property commons' for the purpose of preventing the commercial development of a disruptive technology that would otherwise threaten existing industry margins. The strategy of spoiling incentives to commercialize public sector scientific inventions by eliminating exclusive intellectual property rights—the strategy of the commons—is motivated by a fear of cannibalization and supported by a credible threat. It is shown that the degree of cannibalization to which the new technology exposes the old market is responsible for this market failure. / Business, Sauder School of / Graduate

The aim of this study is to determine the role that innovation plays in economic development and how an economic environment can be created that is conducive to innovation. The urgent need for development in large parts of the world indicates the importance of the increase in innovative activities because innovation is indicated as the “engine of growth and development”. It was found that innovation takes place within an innovation system and should be studied from a system perspective. The system perspective implies that there are different participants and that these participants function individually but that they also interact (wittingly or unwittingly) with one another. The innovation system is defined as a system that includes the participants or actors and their activities and interactions, as well as the socio-economic environment within which these actors or participants function, which determine the innovative performance of the system. A system approach is therefore necessary to study the influence of innovation on development. The role that innovation plays in economic development has been established by means of the historical patterns of economic development and major innovations as well as an analysis of literature of empirical studies. The historical pattern indicates the importance of innovation for economic development, but literature revealed the complexity of the relationship due to the non-linear relationship among different actors or participants in an innovation system. The main determinants of innovation was identified and a conceptual, descriptive model for an innovation system was developed, indicating the different participants, their roles, the interaction among them, and the economic environment within which the participants function. The model was applied to the Mpumalanga province in South Africa as case study. Strengths and weaknesses were identified in the Mpumalanga innovation system and recommendations were made for the improvement of the Mpumalanga innovation system which in turn should lead to an improvement in the economic development of the province. / Economics / D.Comm. (Economics)

The aim of this study is to determine the role that innovation plays in economic development and how an economic environment can be created that is conducive to innovation. The urgent need for development in large parts of the world indicates the importance of the increase in innovative activities because innovation is indicated as the “engine of growth and development”. It was found that innovation takes place within an innovation system and should be studied from a system perspective. The system perspective implies that there are different participants and that these participants function individually but that they also interact (wittingly or unwittingly) with one another. The innovation system is defined as a system that includes the participants or actors and their activities and interactions, as well as the socio-economic environment within which these actors or participants function, which determine the innovative performance of the system. A system approach is therefore necessary to study the influence of innovation on development. The role that innovation plays in economic development has been established by means of the historical patterns of economic development and major innovations as well as an analysis of literature of empirical studies. The historical pattern indicates the importance of innovation for economic development, but literature revealed the complexity of the relationship due to the non-linear relationship among different actors or participants in an innovation system. The main determinants of innovation was identified and a conceptual, descriptive model for an innovation system was developed, indicating the different participants, their roles, the interaction among them, and the economic environment within which the participants function. The model was applied to the Mpumalanga province in South Africa as case study. Strengths and weaknesses were identified in the Mpumalanga innovation system and recommendations were made for the improvement of the Mpumalanga innovation system which in turn should lead to an improvement in the economic development of the province. / Economics / D.Comm. (Economics)