IDEAS home Printed from https://ideas.repec.org/h/spr/eurchp/978-3-030-11833-4_1.html
   My bibliography  Save this book chapter

Two Types of Innovation and Their Economic Impacts: A General Equilibrium Simulation

In: Eurasian Economic Perspectives

Author

Listed:
  • Toshitaka Fukiharu

    (Aoyama Gakuin University)

Abstract

In the traditional two-sector growth model, we show that the real wage rate and the rate of profit converge to positive values when the “constant returns to scale” is assumed. When the “decreasing returns to scale” is assumed, however, the real wage rate converges to zero. Thus, we examine how the trajectories are modified by the creation of a third sector, under the “decreasing returns to scale”. First, we examine the downstream innovation: i.e. the third sector produces a new luxury. This innovation is temporarily effective since it raises the average rate of profit, while the rate converges to the same positive value as in the basic model. Next, we introduce the third sector which produces a new energy: the upstream innovation. This innovation is temporarily effective in raising the real wage rate and the rate of profit so long as it takes place in the early stage. These rates, however, converge to zero. Although the effect on the rate of profit in the downstream innovation is greater than the upstream innovation, it is because the total investment in the latter is greater than the former. Thus, we conclude that the upstream innovation has stronger economic impact.

Suggested Citation

  • Toshitaka Fukiharu, 2019. "Two Types of Innovation and Their Economic Impacts: A General Equilibrium Simulation," Eurasian Studies in Business and Economics, in: Mehmet Huseyin Bilgin & Hakan Danis & Ender Demir & Ugur Can (ed.), Eurasian Economic Perspectives, pages 3-25, Springer.
    • Handle: RePEc:spr:eurchp:978-3-030-11833-4_1
    DOI: 10.1007/978-3-030-11833-4_1
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eurchp:978-3-030-11833-4_1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.