The social costs of innovation policy

Davidson, S and Potts, J 2016, 'The social costs of innovation policy', Economic Affairs, vol. 36, no. 3, pp. 282-293.


Document type: Journal Article
Collection: Journal Articles

Title The social costs of innovation policy
Author(s) Davidson, S
Potts, J
Year 2016
Journal name Economic Affairs
Volume number 36
Issue number 3
Start page 282
End page 293
Total pages 12
Publisher John Wiley and Sons
Abstract Innovation policy is designed to produce social benefits by solving a market failure problem associated with private investment in new knowledge. Yet the social costs of these policy interventions are routinely ignored. We use the Djankov et al. (2003) institutional possibility frontier model to analyse the trade-offs between the social costs of disorder and those of dictatorship that particular innovation policies impose. We show how different innovation policies impose different types of social costs. We conclude that the case for public support for innovation policies is often both distorted and overstated because of failure to account for social costs.
Subject Public Economics- Public Choice
Innovation and Technology Management
Applied Economics not elsewhere classified
Keyword(s) innovation policy
institutional economics
market failure
rent-seeking
DOI - identifier 10.1111/ecaf.12187
Copyright notice © 2016 Institute of Economic Affairs
ISSN 0265-0665
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