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Information Transmission and the Bounds to Growth

Author

Listed:
  • Cozzi Guido

    (University of Rome “La Sapienza”)

  • Spinesi Luca

    (luca.spinesi@tin.it)

Abstract

This paper studies the long run growth implications of the presence of information acquisition and transmission costs. We assume that vertical innovation requires researchers to be informed on the current version of the product they want to improve upon; and we also assume that quasi-fixed managerial inputs are required for production in the manufacturing sector. Despite the fact the increases in total factor productivity cause R&D and managerial quasi-fixed labor costs to decrease in the same way as variable labor costs, the presence of these costs is sufficient to rule out the strong scale effect at all levels of the intertemporal returns to ideas. More importantly, the upper bound of long run growth rates crucially depends on information transmission costs.

Suggested Citation

  • Cozzi Guido & Spinesi Luca, 2004. "Information Transmission and the Bounds to Growth," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-17, March.
    • Handle: RePEc:bpj:bejeap:v:topics.4:y:2004:i:1:n:6
    DOI: 10.2202/1538-0653.1168
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    Cited by:

    1. Joseph Zeira, 2011. "Innovations, patent races and endogenous growth," Journal of Economic Growth, Springer, vol. 16(2), pages 135-156, June.
    2. Guido Cozzi, 2008. "Why the rich should like R&D less," Working Papers 2008_18, Business School - Economics, University of Glasgow, revised Aug 2008.
    3. Lin, Hwan C., 2013. "Optimal Patent Life in a Variety-Expansion Growth Model," MPRA Paper 49790, University Library of Munich, Germany.
    4. Attar, Mustafa A., 2008. "Science in the Third Dimension of R&D," MPRA Paper 9427, University Library of Munich, Germany.
    5. Hwan C. Lin, 2015. "Creative Destruction and Optimal Patent Life in a Variety‐Expanding Growth Model," Southern Economic Journal, John Wiley & Sons, vol. 81(3), pages 803-828, January.

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