100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Summary HPI4001 Case 2 Economic Innovations $4.86   Add to cart

Summary

Summary HPI4001 Case 2 Economic Innovations

 1 view  0 purchase
  • Course
  • Institution

Complete and comprehensive summary of case 2 of HPI4001 Economics of Healthcare

Preview 2 out of 12  pages

  • October 17, 2023
  • 12
  • 2022/2023
  • Summary
avatar-seller
Case 2 Economic Innovations 23-09-2022

What do economists mean by innovations?
Innovation = the successful exploitation of new ideas (commercial application). Innovation
results from these three steps:
1. Research and creativity (obtain new knowledge) Creativity = process or an action,
difficult to describe due to lack of rules
2. Invention = result of creativity, new ideas
3. Design and development (development = a channel in the creativity process, besides
the design)
4. Innovation




Swann: According to economist, an innovation is the commercial application of an invention.
An invention is a generation of new ideas through research or other forms of creativity
(Swann, 2009). It should be an idea in terms of value, profit or be bought and sold on the
market. According to economics, an innovation is the successful exploitation of new ideas!

Difference innovation vs. invention
It is also common to differentiate between invention and innovation, the latter being
characterized by its diffusion: an invention with no market, is thus not an innovation
- Invention: generation of new ideas through research or others forms of creativity
- Innovation: the commercial application of invention. So you need to have an
invention to generate an innovation

Uncertain and successive improvements when innovating
- Innovating is an uncertain activity since you never know how the innovation is
evaluated by the customers/society and what the exact impact is
- The fact that new technologies come into the market in a primitive/embryonal form
which can be improved and widely adopted only after its first introduction highlight

Knowledge as a good
From an economic analysis perspective, knowledge is a public good: it cannot easily be
appropriated by one agent, because to be validated it needs the openness to the critique of

, the scientific community and because its diffusion creates positive externalities, it is a non-
rival good: who uses it does not "consume" it, and thus does not deprive someone else from
using it finally, it is cumulative, with increasing returns.

Which types of innovations exist?
Types of innovation
1) Product innovation:
a. Creation of a new improved product for sale without changing the production
process – except that more input is required (e.g. improvements to a
medication).
b. It is the introduction of goods or services that are new or have gone through
significant improvements related to the characteristics or purpose of using
the product and its benefits.
c. Three characteristics can be used for approaching an product innovation:
intrinsic, perceptual, extrinsic. An innovation is not always interesting for
every consumer, when the innovation made the product too expensive (not
on their WTP), they won’t buy the new version. E.g. medicine and drugs
i. Intrinsic attributes: Appearance, odour, taste/flavour and texture
ii. Extrinsic attributes: Price, origin, nutritional content, branding etc.
iii. Perceptual: the way persons look at the product: high quality/low
quality etc.
2) Process innovation
a. Changes in the way in which a product is made (e.g. improvements in the
process of creating a medication). It means the implementation of a new or
significantly improved production or delivery method (including significant
changes in techniques, equipment and/or software).
b. An economic view, this will change the marginal and fixed costs which can be
seen in the cost curve. The most common will be reducing marginal costs and
increase fixed costs. Examples of a process innovation are marketing, supply
chain or business model innovations.
3) Organizational innovations
a. Changes in the way an organization functions (e.g. hospital reorganization,
outsourcing) (see more in case 4).

Product proliferation:
- Similar basic product different pricing (price discrimination) and difficult to enter the
market (anti-competitive)
- Occurs when organizations market many variations of the same products. This can be
done through different colour combinations, product sizes and different product
uses. This produces diversity for the firm as it is able to capture its sizable portion of
the market.

Fixed costs: are set costs, do not change due to outcome changes VS
Marginal costs: do change if output changes

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Sophiex123. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $4.86. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

79373 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$4.86
  • (0)
  Add to cart