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Growth and Firm Dynamics with Horizontal and Vertical R&D

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Author Info

  • Pedro Rui Mazeda Gil

    ()
    (CEF.UP and Faculdade de Economia, Universidade do Porto)

  • Paulo Brito

    ()
    (Instituto Superior de Economia e Gestão and UECE, Universidade Técnica de Lisboa)

  • Óscar Afonso

    ()
    (CEF.UP and Faculdade de Economia, Universidade do Porto)

Abstract

This 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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File URL: http://www.fep.up.pt/investigacao/workingpapers/10.01.11_wp356.pdf
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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 356.

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Length: 29 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:por:fepwps:356

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Related research

Keywords: endogenous growth; vertical and horizontal R&D; firm dynamics; transitional dynamics;

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Cited by:
  1. Sochirca, Elena & Gil, Pedro Mazeda & Afonso, Oscar, 2014. "Technology structure and skill structure: Costly investment and complementarity effects quantification," Journal of Macroeconomics, Elsevier, Elsevier, vol. 40(C), pages 172-189.
  2. Pedro Gil, 2013. "Animal spirits and the composition of innovation in a lab-equipment R&D model with transition," Journal of Economics, Springer, Springer, vol. 108(1), pages 1-33, January.
  3. Pedro Mazeda Gil & Oscar Afonso & Paulo B. Vasconcelos, 2013. "Industry Dynamics and Aggregate Stability over Transition," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 484, Universidade do Porto, Faculdade de Economia do Porto.
  4. Pedro Mazeda Gil & Fernanda Figueiredo, 2011. "Firm Size Distribution under Horizontal and Vertical Innovation," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c016_065, DEGIT, Dynamics, Economic Growth, and International Trade.
  5. Pedro Mazeda Gil & Oscar Afonso & Paulo Brito, 2012. "Skill Structure and Technology Structure: Innovation and Growth Implications," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 470, Universidade do Porto, Faculdade de Economia do Porto.
  6. Pedro Gil & Fernanda Figueiredo, 2013. "Firm size distribution under horizontal and vertical innovation," Journal of Evolutionary Economics, Springer, Springer, vol. 23(1), pages 129-161, January.

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