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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, multi-product 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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16443.

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Date of creation: Nov 2010
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Handle: RePEc:nbr:nberwo:16443

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