Patents, Priority and Imitation or, the Economics of Races and Waiting Games

Abstract

The literature on the economics of scientific and technological change presents a puzzle. The phenomenon assumes a central role when historians speculate on the unprecedented growth of economic well-being in western industrialised economies over the past one hundred and fifty years or so. And yet, modern resource allocation theory pretty much single-mindedly ignores the phenomenon.' Applied welfare economic theory, more specifically public finance, is today as crowded a field of research as ever before. But it rarely addresses a critical source of well-being: the production, dissemination and use of knowledge. Looking elsewhere, an impressive list of industrial case-studies shows uncompromisingly that research and development or R & D as it is most often referred to constitutes a central strategic weapon for firms in their quest for commercial profits, market share, or indeed plain survival. (See e.g. Enos, I962; Miller and Sawers, I970; Taylor and Silberston, I973; Mansfield et al. 1977; Constant, I980; Braun and Macdonald, i982.)2 Nevertheless, much of modern resource allocation theory seems to assume that neither 'ingenuity' (scientific and technological discoveries) nor 'abstention' (specifically, R & D investment) is subject to individual, corporate, or governmental choice and control. Technological change appears in modern resource allocation theory at least in its advanced-textbook guise much as does that most famous bark in literature: it does not. An occasional bout of schizophrenia can be healthy for a discipline. A persistent display cannot but be a symptom of something gravely wrong. This has not always been so. Classical economists were very much interested in the sources of the growth of economic well-being. But it was left to the last major figure of this school, Marx, to emphasise the role of technological change in capitalist development.3 Modern theorists of economic growth have for the