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Growth Through Heterogeneous Innovations

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  • Ufuk Akcigit
  • William R. Kerr

Abstract

We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multiproduct firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.

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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 12-08.

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Length: 80 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:cen:wpaper:12-08

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Keywords: CES; economic; research; micro; data; microdata; endogenous growth; innovation; exploration; exploitation; research and development; patents; citations; scientists; engineers;

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