Economics of Innovation: Detailed Reading List

Matt Clancy
5 min readAug 28, 2019


This semester I’m teaching a new class on the economics of innovation targeted to interested undergraduates from a wide range of backgrounds (the only prerequisite is Econ 101) and I thought others might find the reading list interesting. The readings are usually anchored to recent research in the economics of innovation, but to make the course accessible to people without degrees in economics I’ve tried to find and create accessible overviews of the research. So I hope this is useful for anyone interested in the topic, regardless of their background.

Caveat: these readings are selected to illustrate a big concept in the economics of innovation and to lead to a good discussion. They aren’t necessarily the “best” or “most convincing” paper on the topic and of course this list is far from exhaustive. Needless to say, I don’t necessarily endorse all the arguments made either.


Why study innovation?

Where do ideas come from?

Is necessity the mother of invention?

If people randomly come up with new ideas, does more people = more ideas?

Do new ideas come from new knowledge?

Do better ideas come from experience and learning?

Is innovation just another form of evolution?

Is innovation about combining different things in a new way?

Putting it all together:

What background factors matter for innovation?

Why do big cities generate more ideas?

How is innovation affected by institutions?

Why do so many people accept things as they are?

How can we incentivize innovation?

What are spillovers and what challenges do they present to businesses doing R&D?

What if we just innovate without using the market at all?

Which is better: secrecy or intellectual property rights?

What about innovation prizes?

Can we use tax policy to steer innovation where we want it to go?

Can we boost innovation by increasing the supply of scientists?

How can we encourage scientists to take bigger risks?

Do we need to stop thinking of individual incentives to innovate?

How should we organize to make innovation happen?

Putting it all together:

What’s the past and future of innovation?

How has the USA organized research in the past?

What have been the big inventions?

Is innovation getting harder?

Or is the singularity approaching?

  • “The AI Revolution: The Road to Superintelligence: Parts 1 and 2” (2015) by Tim Urban.