Scientific research, exsternalities and economic growth

This chapter analyses the effects on economic growth of the basic characteristics of scientific research such as its organization, its reward structure and the social interactions among researchers. It is assumed that a scientist, according to the priority rule, is rewarded not for his effort, but for his achievement. In this sense the race for priority can be compared to the patent race where the winner takes all and the outcome is uncertain. The productivity of researchers depends not Introduction xxi only on personal effort but also on the effort of other researchers with whom a researcher interacts. Finally, academic research is chiefly financed by the state due to the public good nature of academic knowledge. The chapter shows that the social interactions between scientists may have an ambiguous effect on effort in the research activity carried out by a single scientist: it may be positive when group size is not too large and it may become negative beyond a critical size. Moreover, an increase in the fixed component of the salary reduces the possibility of the emergence of a no growth trap, where no research activity occurs, but it reduces the effort of a single individual in the research activity; the opposite effect emerges when the priority-based reward is increased. The reward of prestige always has a positive effect on effort and the probability of success