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The general equilibrium effects of localised technological progress: A Classical approach

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  • Yoshihara, Naoki
  • Veneziani, Roberto

Abstract

We study the general equilibrium effects of localised technical progress à la Atkinson–Stiglitz in economies in which capital is a vector of reproducible and heterogeneous goods. We show that there is no obvious relation between ex-ante profitable innovations and the functional distribution of income that actually emerges in equilibrium. Unlike in the standard macroeconomic approach to technical progress, localised innovations may lead to indeterminacy in equilibrium factor prices, and individually rational choices of technique do not necessarily lead to optimal outcomes. Innovations may even cause the disappearance of all equilibria.

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  • Yoshihara, Naoki & Veneziani, Roberto, 2023. "The general equilibrium effects of localised technological progress: A Classical approach," Journal of Mathematical Economics, Elsevier, vol. 109(C).
    • Handle: RePEc:eee:mateco:v:109:y:2023:i:c:s0304406823000976
    DOI: 10.1016/j.jmateco.2023.102904
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    More about this item

    Keywords

    Localised technical progress; Income distribution; General equilibrium;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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