Giulio, NICOLETTI (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
Abstract
In this paper we assess the properties of scale-free endogenous growth models in presence of use costs for the final users. As bench-mark we use Segerstrom (2000) two R&D sector model. When use costs apply to both types of innovation we find counterintuitive results with respect to the standard Endogenous Growth literature ; use costs can increase growth. This is due to the presence of both increasing returns in the research functions and the population growth condition. When costs apply to vertical innovations only we can establish more intuitive results : under mild conditions use costs decrease the rate of vertical innovation and of overall economic growth.
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Jeremy Greenwood & Boyan Jovanovic, 1998.
"Accounting for Growth,"
NBER Working Papers
6647, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Jeremy Greenwood & Boyan Jovanovic, 2000.
"Accounting for Growth,"
RCER Working Papers
475, University of Rochester - Center for Economic Research (RCER).
[Downloadable!]
Jeremy Greenwood & Boyan Jovanovic, 2001.
"Accounting for Growth,"
NBER Chapters,
in: New Developments in Productivity Analysis, pages 179-224
National Bureau of Economic Research, Inc.
[Downloadable!]