MIAD 4201 Business, Technology, Innovation and Diffusion
Elective course. The course aims to train students to master economic theory and empirical analysis tools to examine the advancement and use of technological knowledge. The course also develops business/corporate and public policy implications every class. The study of advancement and use of technological knowledge may also be interesting for students from other university departments, and they are welcome. The course examines the specificities of markets for technological knowledge. The first part of the course examines case studies of technological advance to introduce a common language and provide the intuition for market failure in the production, advancement and use of technological knowledge. The second part of the course examines the production of new technology (innovation) - how the specific characteristics of technological knowledge interact with markets and other institutions and affect the rate and direction of technological knowledge production. The third part of the course examines the demand for new technological knowledge (diffusion) – how the specific characteristics of technological knowledge interact with markets and other institutions and affect the rate of adoption of new technologies.
For instance, we will discuss the role that the patent institution plays in reducing market failure, and the limitations this institution has in providing the right incentives to produce and advance technological knowledge. A particular limitation of the patent institution is that it provides little incentives to produce technological knowledge to develop goods and services aimed at the poor. Pharmaceutical companies do not invest in developing a malaria vaccine because those who are exposed to malaria are mostly poor and cannot pay for vaccines. Economists have developed the idea of patent buyouts. Government can offer to pay the first pharma company to develop patents for the malaria vaccine and pass the FDA clinical trials a large sum of money, and then provide the vaccine to its (poor) inhabitants. The recent Ebola epidemic offers interesting information to assess further the case for patent buyouts. Three pharma companies have decided to produce an Ebola vaccine to enhance their reputation and are now competing to produce it first. And several developed country donor agencies and NGOs have offered subsidies to these companies to cover some of the R&D costs. Thus, other mechanisms may also play a role in inducing pharma company investment. We will discuss the advantages and disadvantages of patent buyouts to promote development of a malaria vaccine.
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