Growth and Firm Dynamics with Horizontal and Vertical R&D
AbstractThis paper develops a tournament model of horizontal and vertical R&D under a lab-equipment specification. A key feature is that the overall growth rate is endogenous, as the splitting of the growth rate between the intensive and the extensive margin is itself endogenous. This setup gives rise to strong inter-R&D composition effects, while making economic growth and firm dynamics closely related, both along the balanced-growth path and transition. The model hence offers a (qualitative) explanation for the negative or insignificant empirical correlation between aggregate R&D intensity and both firm size and economic growth, a well-known puzzle in the growth literature.
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Bibliographic InfoPaper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 356.
Length: 29 pages
Date of creation: Jan 2010
Date of revision:
endogenous growth; vertical and horizontal R&D; firm dynamics; transitional dynamics;
Find related papers by JEL classification:
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-23 (All new papers)
- NEP-CSE-2010-01-23 (Economics of Strategic Management)
- NEP-DGE-2010-01-23 (Dynamic General Equilibrium)
- NEP-FDG-2010-01-23 (Financial Development & Growth)
- NEP-INO-2010-01-23 (Innovation)
- NEP-SBM-2010-01-23 (Small Business Management)
- NEP-TID-2010-01-23 (Technology & Industrial Dynamics)
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- Pedro Gil, 2013.
"Animal spirits and the composition of innovation in a lab-equipment R&D model with transition,"
Journal of Economics,
Springer, vol. 108(1), pages 1-33, January.
- Pedro Mazeda Gil, 2010. "Animal Spirits and the Composition of Innovation in a Lab-Equipment R&D Model with Transition," DEGIT Conference Papers c015_040, DEGIT, Dynamics, Economic Growth, and International Trade.
- Pedro Mazeda Gil & Fernanda Figueiredo, 2011. "Firm Size Distribution under Horizontal and Vertical Innovation," DEGIT Conference Papers c016_065, DEGIT, Dynamics, Economic Growth, and International Trade.
- Elena Sochirca & Pedro Mazeda Gil & Oscar Afonso, 2013. "Technology Structure and Skill Structure: Costly Investment and Complementarity Effects Quantification," FEP Working Papers 478, Universidade do Porto, Faculdade de Economia do Porto.
- Pedro Mazeda Gil & Oscar Afonso & Paulo Brito, 2012. "Skill Structure and Technology Structure: Innovation and Growth Implications," FEP Working Papers 470, Universidade do Porto, Faculdade de Economia do Porto.
- Pedro Mazeda Gil & Oscar Afonso & Paulo B. Vasconcelos, 2013. "Industry Dynamics and Aggregate Stability over Transition," FEP Working Papers 484, Universidade do Porto, Faculdade de Economia do Porto.
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