Economics of Innovation

llsms2041  2022-2023  Louvain-la-Neuve

Economics of Innovation
5.00 credits
30.0 h
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
Main themes
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.
Learning outcomes

At the end of this learning unit, the student is able to :

1 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).
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.
  • Information and appropriability
  • Market structure and incentives for R&D
  • Patents and efficiency
  • Intellectual property in the digital economy

Teaching methods
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
Evaluation methods
The final grade in this course is based on grades in individual coursework (45%), group coursework (25%) and final exam (30%).
  • Individual coursework. The individual coursework consists of written answers to several quiz questions about the cases discussed in class.
  • Group coursework. The task, guidelines, and deliverables will be specified in class (the global theme on which the groups are working is changed every year).
  • Final exam. The final exam is a 1-hour, close-book, written exam covering the entirety of the course.
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).
Other information
  • international case study
Online resources
See the Moodle web site of the course.
References : Provided during the class
Lecture notes and Slides provided through Moodle
Faculty or entity

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

Title of the programme
Learning outcomes
Master [60] in Economics : General

Master [120] : Business Engineering

Master [120] in Economics: General

Master [120] : Business Engineering