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Bubbles and the Value of Innovation / Valentin Haddad, Paul Ho, Erik Loualiche.
- Format:
- Book
- Author/Creator:
- Haddad, Valentin.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29917.
- NBER working paper series no. w29917
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- Booming innovation often coincides with intense speculation in financial markets. Using over a million patents, we document two ways the market valuation of innovation and its economic impact become disconnected during bubbles. Specifically, an innovation raises the stock price of its creator by 40% more than is justified by future outcomes. In contrast, competitors' stock prices move little despite their profits suffering. We develop a theory of investor disagreement about which firms will succeed that reconciles both the facts, unlike existing models of bubbles. Optimal innovation policy during bubbles must account for the disconnect.
- Notes:
- Print version record
- April 2022.
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