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Legal institutions, innovation, and growth

Anderlini, Luca, Felli, Leonardo, Immordino , Giovanni and Riboni, Alessandro (2013) Legal institutions, innovation, and growth. International Economic Review, 54 (3). pp. 937-956. ISSN 0020-6598

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Abstract

We analyze the relationship between legal institutions, innovation, and growth. We compare a rigid legal system (the law is set before the technological innovation) and a flexible one (the law is set after observing the new technology). The flexible system dominates in terms of welfare, amount of innovation, and output growth at intermediate stages of technological development-periods when legal change is needed. The rigid system is preferable at early stages of technological development, when commitment problems are severe. For mature technologies, the two legal systems are equivalent. We find that rigid legal systems may induce excessive R&D investment

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/%28...
Additional Information: © 2013 The Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
K Law > K Law (General)
Sets: Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Research centres and groups > Financial Markets Group (FMG)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Funders: Fonds québécois de la recherche sur la societé et la culture
Date Deposited: 02 Aug 2013 11:58
URL: http://eprints.lse.ac.uk/51354/

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