Economics of Innovation

LLSMS2041  2020-2021  Louvain-la-Neuve

Economics of Innovation
La version que vous consultez n'est pas définitive. Cette fiche d’activité peut encore faire l'objet de modifications. La version finale sera disponible le 1er juin.
5.0 crédits
30.0 h

Belleflamme Paul;

Intermediate Micro-Economics and Introductory Industrial Organization$

In addition, this course is reserved for students with a bachelor's degree in business engineering or students with equivalent quantitative method skills

Thèmes abordés

The course aims at analysing the mechanisms and institutions governing the production, use and diffusion of information and knowledge. It also aims at developing a rigorous economic analysis of a large set of issues surrounding intellectual property, R&D and innovation. In this field, the economic approach appears as fundamental as it focuses on markets, incentives and strategic interaction.


Having regard to the LO of the programme, this activity contributes to the development and acquisition of the following LO:

  • 1. Corporate citizenship
  • 1.1. 'Demonstrate independent reasoning, look critically  '
  • 2. Knowledge and reasoning
  • 2.1. Master  the core knowledge  of each  area  of management.
  • 2.2. Master  highly specific  knowledge   '
  • 2.3. Articulate the acquired knowledge  from different areas
  • 2.4. Activate and apply the acquired knowledge  '
  • 3. A scientific and systematif approach
  • 3.1. Conduct a clear,  structured, analytical  reasoning '
  • 3.2. Collect, select  and  analyze  relevant  information   '
  • 3.3.Consider  problems using  a  systemic and  holistic  approach  '
  • 3.4. Perceptively  synthesize  'demonstrating a certain  conceptual distance '
  • 3.5.Produce, through  analysis  and  diagnosis, implementable solutions'
  • 5. Work effectively in an international and multicultural environment
  • 5.2.Position ... the functioning  of an organization, in its ...socio-economic dimensions'
  • 6. Teamwork and leadership
  • 6.1. Work in a team...
  • 8. Communication and interpersonal skills
  • 8.1. Express a clear and structured message'
  • 8.2. Interact  and  discuss effectively  '
  • 9. Personal and professional development
  • 9.1. Independent self-starter  '
  • 9.4. Quick study, lifelong learner '

At the end of this course, the student will be able to:

  1. understand what sets innovation markets apart from other markets.
  2. understand why markets often fail when it comes to produce information and knowledge.
  3. understand why and how governments should intervene in such markets.
  4. use the economic analysis in order to improve their understanding of a number of topical issues (e.g., the impact of patents and generic drugs on the fight against diseases like HIV/AIDS or malaria, software patents, piracy of digital goods, etc).



La contribution de cette UE au développement et à la maîtrise des compétences et acquis du (des) programme(s) est accessible à la fin de cette fiche, dans la partie « Programmes/formations proposant cette unité d’enseignement (UE) ».


Summary, content and methods

  1.  We introduce the main concepts and explain why activities generating information and knowledge are marred by three sources of market failures, which contribute to create a generic problem of appropriability.
  2. We compare various public policy measures that are designed to alleviate this problem of appropriability.
  3. We assess the effect of market structure on the incentives for R&D.
  4. We study how patent protection should optimally be designed. In particular, we address the questions of the optimal length and breadth of patents.
  5. We apply the previous general analyses to the specificities of the digital economy. Two topical issues are addressed: the piracy of digital products and the development of open-source software.


  • Information and appropriability
  • Market structure and incentives for R&D
  • Patents and efficiency
  • Intellectual property in the digital economy





Méthodes d'enseignement

The theoretical material is presented during the lectures. Students are asked to work in groups and individually in order to apply the theoretical framework to specific case studies and/or to topical issues.

In-class activities

  • Lectures
  • Group discussions
  • Testimonies by external experts 

At home activities

  • Readings to prepare the lectures
  • Assignments
Modes d'évaluation
des acquis des étudiants

The final grade in this course is based on grades in individual coursework (40%), group coursework (40%) and final exam (20%).

  • Individual coursework. The individual coursework consists of written answers to quiz questions about the cases discussed in class. Each quiz will consist of a single question, asking for a justified opinion. Your response to each quiz should be 300-500 words long. All quizzes are required to be completed, and the mark will consist of quiz answers relating to two cases, to be selected at random at the end of the course. Please bear in mind that – in addition to being marked – the quizzes have the purpose to prepare you for the class discussion.
  • Group coursework. The task is to devise and develop a business case for an existing business. Each team is expected to submit a written report (max 6,000 words, excluding references and appendix) that provides a compelling argument for a company to invest in and launch a new product or service. Imagine that you work for this company, and that the recipient of the business case is a senior manager from whom you need support to go ahead. Propose a new product or service that you believe this company should introduce. This may be because the company is particularly well placed to introduce a specific innovation, or because it is threatened by competition and will suffer if no action is taken. Use all information that you can find on the company to build your case. This information may include annual reports, regulatory information issued by the company, press information (FT, Economist, etc.) and any other information source that you can identify, such as personal contacts. All members of the team will receive the same mark, regardless of individual contributions.
  • Final exam. The final exam is a 1-hour, close-book, written exam covering the entirety of the course. The focus is on economic intuition and interpretation of cases, and not on mathematical reasoning. The exam will be organized in the two regular exam sessions (January and August).
  • Important note. The marks for the individual coursework are set once and for all (this part of the assessment cannot be retaken). However, students have the possibility to retake the final exam in August and, if the mark of the group coursework is below 10/20, to replace it with an individual coursework (to be handed in June or in August).
Autres infos


  • international case study
en ligne

See the Moodle web site of the course.


References : Provided during the class

Lecture notes and Slides provided through Moodle

Faculté ou entité
en charge

Programmes / formations proposant cette unité d'enseignement (UE)

Intitulé du programme
Master [120] : ingénieur de gestion

Master [120] : ingénieur de gestion

Master [60] en sciences économiques, orientation générale

Master [120] en sciences économiques, orientation générale