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Title:Legal institutions, innovation and growth PDF Logo
Authors:Anderlini, Luca
Felli, Leonardo
Immordino, Giovanni
Riboni, Alessandro
Issue Date:2011
Series/Report no.:CESifo working paper: Industrial Organisation 3489
Abstract:We analyze the relationship between legal institutions, innovation and growth. We compare a rigid (law set ex-ante) legal system and a flexible one (law set after observing current 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 (lack of) commitment problems are severe. For mature technologies the two legal systems are equivalent. We find that rigid legal systems may induce excessive (greater than first-best) R&D investment and output growth.
Subjects:legal system
commitment
flexibility
innovation
growth
JEL:O30
O43
L51
E61
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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