Economics 318: Economics of Technology

Professor Christiaan Hogendorn
Spring 2003

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Syllabus


I. Introduction

Jan. 23 Th 1. Organization
Baumol, Preface
Book Review in The Economist, May 18, 2002.
Jan. 28 T 2. Introduction to the Micro Theory of Innovation
Nakamura, Leonard I., Economics and the New Economy: The Invisible Hand Meets Creative Destruction, Business Review Federal Reserve Bank of Philadelphia, July/August 2000. pp. 15-30.
Baumol, Chapters 1,2. (Barrett, Z)
Varian, Hal, "High-Technology Industries and Market Structure," in Economic Policy for the Information Economy Federal Reserve Bank of Kansas City, 2001, pp. 65-124. (Nicole, Yuji)
Jan. 30 Th 3. Introduction to the Economic History of Innovation
DeLong, J. Bradford, and Lawrence Summers, "The 'New Economy': Background, Historical Perspective, Questions, and Speculations," in Economic Policy for the Information Economy Federal Reserve Bank of Kansas City, 2001, pp. 11-63. (Brotzman, Lisa)
Baumol, Chapter 14.
Mokyr, Chapter 10. (Brian, Danny)
Feb. 4 T 4. Introduction to Growth Theory
Grossman, Gene, and Elhanan Helpman, "Endogenous Innovation in the Theory of Growth," The Journal of Economic Perspectives, Vol. 8, No. 1, Winter, 1994, pp. 23-44.
(Hema, Veer)
*Baumol, Chapter 15. (Nicole, Yuji)
   Notes,Baumol Chapter 15
Feb. 6 Th 5. Technology Presentations I
Squaresoft Profile
"Strong Players", The Economist, Dec. 12, 2002.
Elrod-Erickson, Matthew and William Ford, "Economic Implications of the Human Genome Project," Business Economics, Vo. 35, No. 4, October, 2000.
Feb. 11 T 6. Technology Presentations II
"Trouble in the Making", The Economist, August 31, 2002.
Eric Gillin, "Crackdown on Big Pharma May Result in More Generics, TheStreet.com, 04/27/2002.
American Nuclear Society, "Fusion Energy," Position Statement 12, November 1999.
Dept. of Energy, Strategic Plan on renewable energy, 2002.
Feb. 13 Th 7. Technology Presentations III
Fuel cells, display technology

II. Microeconomic Theory of Innovation

Feb. 18 T 8. Competition: Sunk Costs and Innovation Arms Races
*Stiglitz, Joseph, "Technological Change, Sunk Costs, and Competition," Brookings Papers on Economic Activity, 1987, Issue 3, pp. 883-937. (Just skim pp. 911-925.) (Adam, Rich)
Baumol, Chapter 3,4. (Brian, Tom)
Feb. 20 Th 9.
*Kohn, Meir, and John Scott, "Scale Economies in Research and Development: The Schumpeterian Hypothesis," Journal of Industrial Economics, Vol. 30, No. 3, March, 1982, pp. 239-249. (Brotzman, Cindy)
Olegario, Rowena, "IBM and the Two Thomas J. Watsons," Chapter 10 in Thomas McCraw, ed., Creating Modern Capitalism, Harvard University Press, 1995. (Saleh, Yogi)
Feb. 25 T 10. Entrepreneurship, Law, and Government
Baumol, Chapter 5. (Lauren, Oksana)
Emerging Technologies and Public Policy: Lessons from the Internet, Gerald Faulhaber, in Wharton on Emerging Technologies 1999. (Cindy, Naa)
Feb. 27 Th 11.
*Murphy, Kevin, Andrei Shleifer, and Robert Vishny, "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Vol. 106, No. 2, 1991, pp. 503-530. (Lauren, Oksana)
Optional: Koehn, Nancy, "Josiah Wedgwood and the First Industrial Revolution," Chapter 2 in Thomas McCraw, ed., Creating Modern Capitalism, Harvard University Press, 1995.
March 4 T 12. Interdependence and Consortia
*Baumol, Chapter 6-7. (Markus, Stephen)
March 6 Th 13.
Temin, Peter, "The Industrialization of New England: 1830-1880," NBER Historical Paper 114, February 1999. (Z)
Rosenberg, Nathan, "Technological Interdependence in the American Economy," Chapter 3 in Inside the Black Box: Technology and Economics, Cambridge University Press, 1982.
Optional: Nye, David, "Flexible Factory," Chapter 5 in Electrifying America, MIT Press, 1990.

Spring Break
 
March 25 T 14. Compatibility and Standards
Bresnahan, Timothy, and Shane Greenstein, "Technological Competition and the Structure of the Computer Industry," Journal of Industrial Economics, Vol. 47, No. 1, March 1999, pp. 1-40.
March 27 Th 15.
*Arthur, W. Brian, "Competing Technologies, Increasing Returns, and Lock-in by Historical Events," Economic Journal, Vol. 99, No. 1, 1989, pp. 116-131. (Hema, Veer)
David, Paul, "Clio and the Economics of QWERTY," American Economic Review Papers and Proceedings, Vol. 75, No. 2, May, 1985, pp. 332-337.
Optional: Puffert, Douglas, "The Standardization of Track Gauge on North American Railways, 1830-1890," The Journal of Economic History, Vol. 60, No. 4, December 2000, pp. 933-960.
April 1 T 16.
*Cremer, Jacques, Patrick Rey, and Jean Tirole, "Connectivity on the Commercial Internet," Journal of Industrial Economics, Vol. 48, No. 4, December 2000, pp. 433-472. (Only read through the end of section IV.) (Greg, Tom)
April 3 Th 17. Bottlneck Access
Faulhaber, Gerald, "Access ≠ Access1 + Access2," The Law Review of Michigan State University, Vol. 677, 2002. (Barrett, Stephen)
*Baumol, Chapter 13. (Abdullah, Z)
April 8 T 20. Pricing and Price Discrimination
*Baumol, Chapter 9-10. (Danny, Haley)
April 10 Th 21.
Vickrey, William, "Some Objections to Marginal Cost Pricing," Journal of Political Economy, Vol. 56, No. 3, 1948, pp. 218-238. (Brian, Rick)
Perelman, Michael, "Retrospectives: Fixed Capital, Railroad Economics and the Critique of the Market," Journal of Economic Perspectives, Vol. 8, No. 3, 1994, pp. 189-195. (Brotzman, Adam)
April 15 T 18. Spillovers
*Baumol, Chapter 8. (Lisa, Naa)
Clement, Douglas, "Was Napster Right?," The Region, Federal Reserve Bank of Minneapolis, Sept. 2002. (Abdullah, Marcus)
April 17 Th 19.
Arrow, Kenneth, "Economic Welfare and the Allocation of Resources for Invention," in Richard Nelson, ed., The Rate and Direction of Inventive Activity, Princeton University Press, 1962, pp. 609-625.(Greg, Haley)
*Bresnahan, Timothy, and M. Trajtenberg, "General Purpose Technologies 'Engines of Growth'?" Journal of Econometrics, Vol. 65, 1995, pp. 83-108. (Saleh, Yogi)
April 22 T 22. Conclusion
Review of complementarities and spillovers (Barrett, Cindy)
Review of other topics (Prof. Hogendorn)

III. Perspectives on Technologies

April 24 Th 23.
pharmaceuticals, semiconductors
April 29 T 24.
fuel cells, display technologies
May 1 Th 24.
fusion, genetics
May 6 T 24.
video games