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Legal institutions, innovation, and growth

Accepted version
Peer-reviewed

Type

Article

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Authors

Anderlini, L 
Immordino, G 
Riboni, A 

Abstract

jats:pWe analyze the relationship between legal institutions, innovation, and growth. We compare a rigid legal system (the law is set before the technological innovation) and a flexible one (the law is set after observing the new 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 commitment problems are severe. For mature technologies, the two legal systems are equivalent. We find that rigid legal systems may induce excessive R&D investment.</jats:p>

Description

Keywords

38 Economics, 3801 Applied Economics, 3802 Econometrics, 3803 Economic Theory

Journal Title

International Economic Review

Conference Name

Journal ISSN

0020-6598
1468-2354

Volume Title

54

Publisher

Wiley

Rights

All rights reserved