Job Market Paper
Technology Choice, Spillovers, and the Concentration of R&D
November 2024
Publications
Regulating Transformative Technologies (with Daron Acemoglu)
September 2024, American Economic Review: Insights • Online Appendix • Code • NBER
Media: Chicago Booth Review • Marginal Revolution • Quartz
Implications of Uncertainty for Optimal Policies (with Maxim Troshkin)
January 2022, Journal of Economic Theory • Slides
Working Papers
Combining Complements: Theory and Evidence from Cancer Treatment Innovation (with Rebekah Dix)
November 2024
Input-Price Responses to Horizontal Mergers and the Bargaining-Leverage Defense (with Rebekah Dix)
September 2022 • SSRN
In Progress
Entrepreneurship and Productivity Growth in Tight Labor Markets
Abstract
Motivated by recent evidence linking local labor market tightness to business creation, I study conditions under which a positive aggregate demand shock can raise productivity growth by incentivizing high-tech entrepreneurship. I develop a search model of the labor market in which workers face an occupational choice between employment and entrepreneurship. Successful entrepreneurs create firms by adopting technologies from a productivity frontier, while unsuccessful ones become unemployed. An aggregate demand shock that raises labor demand has an ambiguous effect on entrepreneurship: A tighter labor market lowers the cost of failure by shortening unemployment spells, but it also directly raises the opportunity cost of entrepreneurship. The former channel dominates when successful entrepreneurs primarily come from employment, providing a mechanism by which an increase in aggregate demand can increase productivity. This mechanism suggests a novel role for accommodative monetary policy to stimulate productivity growth, and I consider methods to estimate its magnitude in the data.
A Theory of Innovative Firms and Power over New Technologies and Researchers
Abstract
I construct a theory to explain the emergence of large, innovative firms as a means to internalize spillovers in the innovation process, and I show how these firms exert power over the direction of innovation and the labor market for researchers. Researchers must choose one of several technologies to study, and their innovations generate knowledge spillovers to others working on the same technology. A manager can internalize these spillovers by coordinating researchers’ innovation decisions, raising economic growth given a fixed set of technologies. But with limits to firm size from convex monitoring costs, this innovative firm can instead slow growth and reduce welfare when new technologies arrive over time: If innovation is combinatorial, so that the owners of past innovations for a technology benefit from subsequent ones, the firm has an incentive to pursue an old technology even as outside researchers exploit a more productive new one. Limits to firm size imply that spillovers are only partially internalized, so the equilibrium direction of innovation is generally inefficient. These spillovers allow the firm to distort the innovation decisions of outside researchers, and I explore how the firm can exploit its size in the labor market for researchers to affect the direction of innovation.
Technology Paradigms, Lock-in, and Economic Growth (with Daron Acemoglu)
Abstract
We develop a theory of economic growth in which innovation alternates between dominant technological paradigms and the emerging paradigms that might replace them. Innovation within a paradigm is subject to decreasing returns as “ideas get harder to find,” but innovations for an emerging paradigm only generate profits after it becomes dominant. Our analysis reveals how this trade-off can generate technological lock-in or growth cycles. Long-run growth requires the development of both dominant and emerging paradigms, and we show how creative destruction within and across paradigms distorts this process. We explore methods to identify technological paradigms in the patent data, facilitating empirical analysis of productivity dynamics as industries proceed along paradigms and transition between them. We assess the extent to which declining research productivity can be attributed to the maturation of dominant paradigms, suggesting scope for a growth resurgence as innovators explore alternatives.