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Endogenous innovation in a north-north model of the product cycle

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  • Alison Butler
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    Abstract

    This paper examines the effect of endogenous innovation in a North-North model of the product cycle. Innovation is a dynamic process that requires labor to b employed in research and development for innovation to occur. Technology is transferred both within and across countries. The results show that in this generalized product cycle model, the amount of innovation and technology transfer affects the economic incentives to innovate and the relative wages in both countries. As a result, changes in the amount of innovation in one country can have significant redistributional effects worldwide, both across and within countries.

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    File URL: http://research.stlouisfed.org/wp/more/1990-007/
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    File URL: http://research.stlouisfed.org/wp/1990/90-007.pdf
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    Bibliographic Info

    Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1990-007.

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    Date of creation: 1990
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    Handle: RePEc:fip:fedlwp:1990-007

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    Keywords: Technology ; Econometrics;

    References

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    1. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
    2. Stokey, Nancy L, 1988. "Learning by Doing and the Introduction of New Goods," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 701-17, August.
    3. Jensen, Richard & Thursby, Marie, 1986. "A strategic approach to the product life cycle," Journal of International Economics, Elsevier, vol. 21(3-4), pages 269-284, November.
    4. Dinopoulos, Elias & Oehmke, James F. & Segerstrom, Paul S., 1993. "High-technology-industry trade and investment : The role of factor endowments," Journal of International Economics, Elsevier, vol. 34(1-2), pages 49-71, February.
    5. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-91, December.
    6. Dollar, David, 1986. "Technological Innovations, Capital Mobility, and the Product Cycle inNorth-South Trade," American Economic Review, American Economic Association, vol. 76(1), pages 177-90, March.
    7. Judith C. Chin & Gene M. Grossman, 1988. "Intellectual Property Rights and North-South Trade," NBER Working Papers 2769, National Bureau of Economic Research, Inc.
    8. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
    9. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-66, April.
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