Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235378 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9008
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
Innovation is part idea generation and part development. We build a model of “innovating-by-doing,” whereby ideas come to practitioners. Successful innovation requires that practitioners’ ideas be developed through costly effort. Our model nests existing theories of laboratory research and learning-by-doing. Empirically, we analyze the effect of the U.S. Medicare program on medical equipment innovation. Our model’s structure allows us to infer the Medicare program’s aggregate effects. We estimate that Medicare’s introduction led to a 20 to 30 percent increase in medical equipment patenting across the United States, of which roughly half is due to the innovating-by-doing channel.
Subjects: 
innovation and invention
medical innovation
health care
health insurance
JEL: 
I13
O38
O31
H51
Document Type: 
Working Paper
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