Inventing or Spying? Implications for Growth

An engineer graduates if she derives the obvious implications of her instructor's hints. But the patent system rewards only the first to present nonobvious advancements--ideas similarly skilled engineers are not expected to invent. If a fraction of the newly invented hints spill over before the technological advances they entail are completed and granted legal protection, the R&D workers will find it convenient to spend some time searching for each other's hints instead of creating their own. A simple modification of the basic Schumpeterian model shows that the larger the skilled population, the larger the relative incentive to spy.