Economics Department

Course Content

This course examines the effects of science and technology on the economic system, and the effects of economic incentives and the characteristics of economic institutions on scientific research and technological development. The focus is on economic innovation: the application of new production methods to economic activity and the introduction of new products. While our emphasis is on economics, we will draw from history and policy studies as well. Reading will be drawn from journal articles and professional books. There will sometimes be more reading than is ideal; try to read each paper to understand what is new and important in it.

Expected Learning Outcomes: (because the accreditors insist that they be here): At the end of this class, you should be able to:

• Read, understand, and analyze recent economic research on technological innovation;
• Understand and analyze the interaction of economic institutions and technological progress;
• Understand the concept of appropriability of research and development, how it is affected by intellectual property and other institutions of the economic system, and how high and low appropriability affect the extent and nature of economic innovation;
• Understand the current evidence about how technology has affected wages and labor markets, and how changes in wages help direct research and development activity;
• Understand the role of patents in morivating innovations both theoretically and empirically and the criticisms and abuses of the modern U.S. patent system;
• Understand why conventional capital market lending does not work well for funding innovation and the roles of venture capital and other funding mechanisms;
• And understand how economic policies and government, educational, and corporate institutions comprise a national innovation system, and how economic success is affected by such systems.

Class Format

This class will meet for three 50-minute sessions per week, Mondays, Wednesdays, and Fridays at 12:15pm on Zoom. The link to the conference meeting is on the Moodle site. Class sessions will usually be conducted as conferences. Extensive student participation is expected.

Prerequisites

The only prerequisite is Economics 201: Introduction to Economic Analysis. We will use mathematical analysis infrequently in this class. When mathematical models are analyzed, students lacking the calculus and econometric tools used in the readings are encouraged to read "between the equations" to develop an understanding of the economic points the author is making.

Office Hours

The instructor will hold formal office hours via Zoom on Mondays and Tuesdays from 10:30 to 11:30. The class Moodle site provides a Zoom link. Feel free to make an appointment or to send me and email if these hours are not convenient for you. The best way to communicate with the instructor outside of class is via electronic mail. Send email to parker@reed.edu. [Note: Do not send email to jparker or parkerj, these go to other people!

Required Work

Exams: There will be a mid-term exam and a final exam for this course. Both exams will be essay-oriented and may be partially or wholly take-home. The final exam will be scheduled later in the semester.

Daily Class Preparation and Responses: To help focus your reading and the ensuing conference discussion, a set of discussion questions for each class session is shown on the reading list. The class Moodle site also shows these questions and gives you an opportunity to write brief responses. Your responses must be entered in the class Moodle page before 10am on the day of the class in which the material is discussed. I will review at least some of your submissions before class and may try to steer the class discussion toward points of common interest or confusion. As the discussion proceeds, I may ask students from the class to raise points for discussion from their comments. 

In an ideal world, every student would read all of the readings for every class. While Reed approaches this ideal world more closely than most colleges and universities, I recognize that there will be times when some students are unable to complete all of the reading and/or do the Moodle responses. The responses will be "graded" very simply: There are three points for each class day. You get none if you don't submit responses. You get two if your responses are satisfactory and substantial (and one if they fall short of that). You get the third point if your responses are outstandingly complete or insightful. There are scheduled to be about 32 class sessions with substantive reading and discussion questions. 

In preparing for class, I suggest that you follow the recommendations in the instructor's guide to reading economics papers. This will help you focus on what is important in your reading and preparation.

Article Summaries: Twice during the semester, once in March and once in April, each student should submit a short essay (about 500 words) summarizing one or more articles from an economics journal relating to a topic from this course, but not on the required reading list for class. Your audience is your classmates: someone who has read and understood the assigned reading so far in this class. Explain the question that the author(s) attempt to answer and why it is important, very briefly describe how they go about answering it, then explain the results and what they mean. There will be a place on the Moodle page for you to submit your essays. The first can be submitted at any time up March 17. The second at any time from March 17 to the end of reading week. Be sure to include a pdf copy of the paper you are summarizing in your submission and a full citation to the paper in your essay.

Simulation Experiment: All students will participate in an extended simulation experiment on technological innovation outside of class. Participation involves making decisions about R&D policy for a hypothetical firm that you manage. Each day before noon, you will receive an update via electronic mail. You will be asked to respond to this information by making decisions about your R&D policies for the next period. These decisions must be submitted electronically by 6am the following day. (Weekends will count as a single day: decisions are due by 6am, Monday through Saturday, with information sent out by noon that day.) Failing to respond will not be penalized directly, but will be interpreted as undertaking no new actions in the period, which may be a risky innovation strategy. The experiment will continue for at least several weeks. There may be a short written assignment or perhaps an exam question relating to the experiment.

Semester final project: During the second half of the semester, students will work in teams to study the national innovation system of one country. A written report will be due on April 23. Teams will present their results electronically during class time during the final week of the semester.

Grading

Grades will be based on all information the instructor has about your level of understanding of the subject matter. This includes evidence from exams, daily question responses, class and experiment participation, essays, the final project, and individual discussions.

Assigned Readings

We will read a fairly large amount of material from a variety of sources. Much of the reading is from journal articles and books. To the extent possible, we will provide electronic access to these materials. If you want your own copy of any of these books, they can be ordered from the Reed Bookstore or from online sources. Most cost less than $50 (new) and some are under $30.