Economic Theory

E350 / E454 Innovation and Technological Change


Eligible candidates 3rd year Bachelor; Master
Time and place

Thursday 08:30-10:00; from April 18 on, Room: HS 06, Neue Aula

Credits 6 ECTS
Examination requirements written exam and assignments

- a tutorial accompanying the assignments will take place (no compulsory attendance), Thursday 10-12:00; from May 2 on; Room ÜR 111, Universitätskasse,

- slides are provided through ILIAS


- for master's students only: E551 Master Seminar on Resources, Innovation and Growth (Prof. Stadler, 9 ECTS, with presentation and term paper)

Registration No registration required
Compulsory attendance No


Innovation is the main driving force of the development of firms, industries and economies. The causes and effects of innovation cannot be explained in a satisfying way by focusing on only one of these levels. The lecture therefore provides an integrated bottom-up analysis of the innovation process, starting at the microeconomic firm level (innovation management), moving on to the industry level (dynamic competition), the aggregate macroeconomic level (innovation and growth dynamics), and finally the global level (innovation and international trade).

1. Innovation Economics: Preliminaries

1.1 Economic History: Technological Breakthroughs

1.2 Empirical Evidence: Schumpeterian Hypotheses

1.3 Mathematical Toolbox: Dynamic Optimization

2. Innovation Management: The Firm Level

2.1 Optimal Control of an Innovation Project

2.2 Rivalry and Market Uncertainty

2.3 Technological Uncertainty

3. Innovation Competition: The Industry Level

3.1 Standard Innovation Races

3.2 Market Structure and Innovation

3.3 Asymmetric and Sequential Innovation Races

4. Innovation and Economic Evolution: The Country Level

4.1 Innovation and Quality Ladders

4.2 Technological and Structural Change

4.3 Education, Innovation, and Technological Breakthroughs

5. Innovation and International Product Cycles: Outlook to the Global Level

Basic Text Book

Aghion, P., Howitt, P. (1998), Endogenous Growth Theory. Cambridge, MA.

Grossman, G.M., Helpman, E. (1991), Innovation and Growth in the Global Economy, Cambridge, MA.

Kamien, M.I., Schwartz, N.L. (1982), Market Structure and Innovation. Cambridge, MA.