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Economic modelling of innovation demands a great deal from economists since it requires them to analyze the new and unknown. This volume brings together contributions from a distinguished group of scholars who review a wide range of different theoretical and empirical economic approaches to this important topic. Beginning with a survey of recent economic analysis on the role of innovation in driving growth, this volume features papers on the mainstream approaches to the welfare economics of innovation, the pitfalls and delays involved in bringing major inventions to market and the public subsidy of research. Later chapters in the book examine pricing strategies for new products, models of productivity growth, knowledge spillovers across national boundaries and the effect of innovation on income distribution. While recognising the many non-economic factors needed to explain innovation, this text demonstrates that economic analysis has much to offer in its modelling of key concepts such as uncertainty, private information, incentives and public goods.