The Theory of Innovation and Technological Change

Zusatztext

Technological innovation is a fundamental driver of economic development and prosperity. It shapes economic evolution by creating new products and more efficient production processes. The ability to generate and exploit innovations will remain decisive for the future performance of firms, industries, countries, and the global economy. This textbook is structured around the interaction between different levels of economic analysis. It adopts a consistent bottom-up approach, beginning at the level of the individual firm and its decisions regarding research and development (R&D). It then proceeds to the industry level, where firms interact strategically, and ultimately applies this competitive framework to analyze innovation processes in closed and open economies. This progression highlights how microeconomic behavior aggregates into industry dynamics and macroeconomic outcomes. Both practical experience and empirical evidence point to two key criteria for appropriate innovation models. First, innovation should be treated as a dynamic and stochastic process driven by firms' R&D activities, which requires the use of appropriate tools from stochastic dynamic optimization. Second, models should capture the empirically relevant determinants of firms' R&D activities, as well as the resulting technological and structural changes in industries and economies. This necessitates an integrated micro-macro approach. This textbook is the first to present dynamic and stochastic models of innovation and technological change within a fully consistent bottom-up framework. It complements and extends the existing literature by offering a unified and analytically rigorous approach to the study of innovation.

Autorenportrait

Born 1959; 1988 doctorate at the University of Augsburg; 1995 habilitation at the University of Augsburg; Professor of Economics, in particular Economic Theory, at the University of Tübingen.

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