Economics of innovation

We investigate how businesses behave and why they do or don’t choose to innovate. It’s not often clear why some firms choose not to innovate and what are their main obstacles. There are many plausible, half-tested hypotheses about what makes innovation successful, but in many cases, there is insufficient sound evidence to refute or substantiate them.

Orthodox economic theory often treats innovation or technical progress as an unexpected advantage. It predominantly focuses on pricing behaviour and does not seek to explain the behaviour of companies and the process they take to create new technology, processes or products. Conventional theories assume that companies are always on, or close to, the technological frontier and assume that knowledge, once created, quickly disperses throughout the economy. Although this abstraction of how innovation occurs may be reasonable in some branches of economics, it is unhelpful for studies of productivity growth. 

In our research, we avoid notions of instant competitive equilibrium and hyper-rationality and instead investigate how firms actually behave using a variety of economic modelling methods, data science, natural language processing and machine learning to provide unparalleled insights and in doing so ask questions such as:

• How risky is innovation and what role do environmental factors play? 
• Why are some firms consistently below the technological frontier? 
• Should governments intervene in the innovation system?
   

Research areas

Intellectual property rights

We undertake applied economic and legal analysis of the patent, trademark, designs and plant variety rights systems around the world.

Productivity and firm performance 

We analyse the relationship between innovation and firm performance using large panel business databases.

Public innovation policy 

We undertake economic analyses of optimal policy settings in the area of government support for business, the research sector and collaboration between sectors. 

Translation of science 

We analyse the factors driving or inhibiting the use and dissemination of science into industry and the community.

Asian engagement 

We analyse Australia–Asia engagement and the development of Asian economies. 

Research projects

Our current projects within this theme include:  

• the impact of design rights on Australian firms with IP Australia 
• the effects of innovation, R&D and government programs on firm performance 
• the size of knowledge spillovers in the Australian economy 
• the link between innovation and trade 
• the efficacy of the international patent system 
• building an internationally linked trademark database.
   

Industry collaboration

In collaboration with our partners, we aim to improve the performance and productivity of business and industry. We have partnered with several companies and government departments with diverse interests in technology and innovation for policy and management. 

Research team