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Special Interests and Technological Change

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Author Info
Giorgio Bellettini (University of Bologna)
Gianmarco I.P. Ottaviano (University of Bologna and CEPR)

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Abstract

We study an OLG economy where productivity growth comes from two alternative sources: process innovation and learning-by-doing. There is a trade-off between the two in so far as frequent technological updates reduce the scope for learning on existing technologies. A conflict is shown to arise between the young and the old, because the former favor innovation while the latter prefer learning. We model the interaction between overlapping generations and policy makers as a dynamic common agency problem, where competing generations invest a certain amount of resources to lobby either for the maintenance of the current technology or the adoption of a new one. By focusing on truthful Markov perfect equilibria, we characterize the political equilibrium and show its dependence on the underlying demographic, technological and preference parameters.

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Publisher Info
Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2003.59.

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Date of creation: Jun 2003
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Handle: RePEc:fem:femwpa:2003.59

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Related research
Keywords: Technological change; Technology option; Pressure goups; Dynamic common agency;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gene M. Grossman & Elhanan Helpman, 1996. "Intergenerational Redistribution with Short-Lived Governments," NBER Working Papers 5447, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-51, August.
    Other versions:
  3. Krusell, Per & Rios-Rull, Jose-Victor, 1996. "Vested Interests in a Positive Theory of Stagnation and Growth," Review of Economic Studies, Blackwell Publishing, vol. 63(2), pages 301-29, April. [Downloadable!] (restricted)
    Other versions:
  4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September. [Downloadable!] (restricted)
    Other versions:
  5. Dirk & Juuso Valimaki, 1998. "Dynamic Common Agency," Cowles Foundation Discussion Papers 1206, Cowles Foundation, Yale University. [Downloadable!]
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  6. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-92, June. [Downloadable!] (restricted)
    Other versions:
  7. Wolfstetter, Elmar, 1996. " Auctions: An Introduction," Journal of Economic Surveys, Blackwell Publishing, vol. 10(4), pages 367-420, December.
    Other versions:
  8. Maskin, Eric & Tirole, Jean, 2001. "Markov Perfect Equilibrium: I. Observable Actions," Journal of Economic Theory, Elsevier, vol. 100(2), pages 191-219, October. [Downloadable!] (restricted)
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  9. Lohmann, Susanne, 1995. " Information, Access, and Contributions: A Signaling Model of Lobbying," Public Choice, Springer, vol. 85(3-4), pages 267-84, December.
  10. Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-69, August.
  11. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Giovanni Prarolo & Francesco Lancia, 2007. "A Politico-Economic Model of Aging, Technology Adoption and Growth," Working Papers 2007.48, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  2. Giorgio Bellettini & Carlotta Berti Ceroni, 2005. "When the Union Hurts the Workers: A Positive Analysis of Immigration Policy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  3. Igor D. Livshits & James C. MacGee, 2008. "Barriers to Technology Adoption and Entry," University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers 20087, University of Western Ontario, RBC Financial Group Economic Policy Research Institute. [Downloadable!]
  4. E. Bilancini & Simone D’Alessandro, 2006. "Functional Distribution, Land Ownership and Industrial Takeoff: The Role of Effective Demand," DEGIT Conference Papers c011_051, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
    Other versions:
  5. Desmet, Klaus & Parente, Stephen, 2006. "Bigger is Better: Market Size, Demand Elasticity and Resistance to Technology Adoption," CEPR Discussion Papers 5825, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Benjamin R. Bridgman & Igor D. Livshits & James C. MacGee, 2004. "For Sale: Barriers to Riches," University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers 20043, University of Western Ontario, RBC Financial Group Economic Policy Research Institute. [Downloadable!]
  7. Daniel Brou & Michele Ruta, 2007. "Rent Seeking, Market Structure and Growth," Economics Working Papers ECO2007/03, European University Institute. [Downloadable!]
  8. Douhan, Robin & Henrekson, Magnus, 2007. "The Political Economy of Entrepreneurship: An Introduction," Working Paper Series 688, Research Institute of Industrial Economics. [Downloadable!]
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