Technological Environment, Market Structure and Investment in Technological Change
Technical knowhow is a peculiar sort of product in so far as it is often intangible, expensive to produce but relatively cheap to reproduce. From a welfare point of view, the free exchange of information is associated with important benefits. Perfect knowledge allows the economy to achieve the highest possible levels of technical and allocative efficiency with any given stock of knowledge. At the same time, however, the free exchange of information and the existence of rapid imitation seem to be characteristics of an environment particularly unsuited to a rapid growth in the stock of knowledge. Inevitably the real world has sought a compromise by offering legal protection of limited duration for advances in technical knowledge. Both patents and designs attempt to afford property rights to bona fide inventors under UK law and this type of protection is extended outside of technical areas by trademarks and copyrights. The existence of property rights of this kind means that the firm has to decide whether to finance research and development (R and D) or whether to ‘buy in’ new technology which is the end product of other firms’ R and D programmes.
KeywordsClay Petroleum Income Marketing Product Line
Unable to display preview. Download preview PDF.
- Fisher, F. M., and Temin, P., ‘Returns to Scale in R and D: What Does the Schumpeterian Hypothesis Imply?’ Journal of Political Economy (1973).Google Scholar
- Shrieves, R., ‘Firm Size, Market Structure and Innovation: Further Evidence’, unpublished working papers, University of Tennessee, College of Business Administration (1974).Google Scholar
- Taylor, C. T. and Silberston, Z. A., The Economic Impact of the Patent System: A Study of British Experience. (Cambridge: Cambridge University Press, 1973).Google Scholar
- Wilson, R., The Sale of Technology through Licensing, unpublished PhD dissertation, Yale University, Appendix to Chapter 5 (1975).Google Scholar