Tag Archives: R&D

11.22.2011 | An Apple’s Patent

This apple has bites rather than bytes but like its namesake it was patented and took years to develop. When its U.S. patent expired in 2008, it had generated close to $6 million for the University of Minnesota and is still producing royalties in Europe. With Google, the nicotine patch and the V-chip, it was even named one of 25 innovations that transformed the world.

The name of this apple? The Honeycrisp.

And now, the Honeycrisp has become a mother. You might enjoy reading about its offspring, the SweeTango in this PBS report and a New Yorker video and article by John Seabrook.

The Economic Lesson

Just like a new drug or chemical process, an apple undergoes R & D, gets intellectual property protection, generates royalties, and creates competition and knock-off concerns when its patent expires.

Having taken 31 years to develop, the Honeycrisp’s royalty revenue stream is divided among its inventors, a fund for further research, and the department/college where the faculty developers worked.

An Economic Question: Citing the Honeycrisp, explain why you agree or disagree with Edwin Mansfield (1930-1997) a University of Pennsylvania economist who said that seemingly small innovations can have a massive impact.

Posted by: adminEcon
Tags: apple, Edwin Mansfield, Honeycrisp, innovation, patents, R&D, University of Minnesota
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11.15.2011 | Sounds Like Bell Labs

Google has a “secret” lab. Called Google X by the NY Times, it sounds like the old Bell Labs.

Before 1984, when AT&T was a monopoly, their research subsidiary Bell Labs employed a battalion of scientists. For some, the assignment was just to “think.” As a result, between 1925 and 1983, Bell Labs created the first fax machine, the original laser, the solar battery cell, light emitting diodes, the UNIX operating system on which the internet is based, digital cell phone technology, and maybe they “heard” the Big Bang.” The transistor, which led to computer microchips, touchtone phones, hi-def TVs and so many other technologies, came from Bell Labs.

Google X might embody some of the same creativity. The NY Times says that they are developing the technology for a driverless car, artificial intelligence, and contemplating a space elevator. Instead of applied research with specific goals to expand existing technology, it appears that Google X is moving beyond.

The Economic Lesson

Research and Development can be divided into 3 categories:

Basic research involves no articulated goals. You could throw plates in the air and watch their trajectory.
Applied research is more goal oriented. Parameters are constrained by a pre-determined objective.
Development, the final stage, involves the practical implementation of the research concept.

An Economic Question: Some say AT&T could support Bell Labs because it was a monopoly. Today, who do you believe can afford to fund seemingly “unproductive” research?

Posted by: adminEcon
Tags: applied research, basic research, Bell Labs, Google, monopoly, R&D, research and development
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01.26.2011 | Who Should Do Drug Research?

Yes or No? Government should pay for high school education? A court system? Roads? Lighthouses? Drug research?

In his blog, Mike Mandel disagrees with spending plans for the National Institutes of Health. As described by the NY Times, a National Center for Advancing Translational Sciences will be established because the private sector has not been creating enough new drugs. The Center’s mission will be to do the basic research that a private firm could then take over and commercialize. Mandel says that government instead should create incentives that encourage private sector innovation. One suggestion is to make the drug approval process less expensive.

The Economic Lesson

What are your criteria for government’s economic role? You could create a “continuum.” At one end would be the belief that government should only fund “public goods” that, as defined in a Planet Money podcast, are things, “…that we all need that will make our lives better, but the market will not and cannot provide.” At the other end, you could say that government has vast spending responsibilities for all things that improve our lives. Where is your “dot” on this scale?

Posted by: adminEcon
Tags: fiscal policy, National Institutes of Health, R&D
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01.09.2011 | Banana Worries

The banana could be in trouble. According to a New Yorker article and video, a devastating banana fungus has struck banana plantations in Asia, Australia and the Pacific. We should note, though, that we are referring only to the Cavendish banana.

Did you know that while there are multiple banana varieties, virtually all bananas that are imported here are the Cavendish? And, we only have the Cavendish because its predecessor, the Gros Michel, was eradicated by a fungus. At the time, growers scrambled to find a substitute and selected the Cavendish. Less tasty but unscathed by the fungus, it became our banana of choice. Indeed, many of us eat more bananas than apples and oranges combined.

So, what will happen? This takes us to banana R&D (Research & Development). On plantations and in labs, growers and scientists are trying to develop resistant strains of bananas so that the Cavendish can survive. So far, Latin American plantations, including Ecuador, a major Chiquita supplier, have not been affected.

The Economic Lesson

Banana R&D represents much more than advancing banana technology. It takes us to who does research and its importance. For example, government funds research at universities, in the Department of Defense, and the National Institutes of Health. Through tax policy and patents, it encourages research in the private sector. Meanwhile, pursuing their self-interest, businesses ranging from pharmaceutical firms to banana growers engage in basic and applied research.

Basic research has no direct purpose except to discover something new. Applied research is directed toward a specific objective. The development part of R&D refers to methods that move from discovery to production.

Posted by: adminEcon
Tags: applied research, bananas, basic research, R&D
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