The economics of innovation is a complex topic with various factors at play.
One factor is the role of bureaucracy in large organizations, which can hinder innovation . When inventors are in startups, they usually only need to convince a few people to implement new technologies, but in larger organizations, getting approval and allocating resources can be difficult due to bureaucracy .
Another factor is the trade-off between working for bigger, older companies versus smaller, younger ones. Inventors who work for bigger companies tend to earn more money but make fewer groundbreaking inventions . These companies may focus more on strategic hiring and patent filing to defend their market share rather than creating new markets and products .
Furthermore, the decline of inventors working for young, small businesses is an important trend to consider. This decline may limit path-breaking discoveries as small companies often prioritize breakthrough innovation rather than defending old turf .
Passing patent laws can stimulate innovation, according to the theory of Paul Romer. However, it is not a guarantee, as other factors such as enforcement and economic growth also come into play .
It is important to note that these are just some of the factors and there is ongoing research in this field. The economics of innovation is a complex and evolving area of study .