Endogenous Technical Change in a Competitive Economy
AbstractWe develop a model of endogenous growth in an economy with competitive markets. Technical change arises from the intentional actions of entrepreneurs looking for profits. Opportunities for such profits stem from inframarginal rents. This provides a counterexample to the widespread view that endogenous technical change is possible only if innovating firms can expect to reap monopoly or oligopoly rents. The model has a unique equilibrium, which involves steady growth at a positive rate. Equilibrium growth is inefficiently low because knowledge spillover effects are neglected. The inefficiency can be eliminated by an interest rate subsidy.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 99-53.
Length: 40 pages
Date of creation: 22 Mar 1999
Date of revision:
Note: Financial assistance from Deutsche Forschungsgemeinschaft under the program
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Other versions of this item:
- Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, vol. 101(1), pages 1-39, November.
- NEP-ALL-1999-11-01 (All new papers)
- NEP-DEV-1999-11-01 (Development)
- NEP-MIC-1999-11-01 (Microeconomics)
- NEP-TID-1999-11-01 (Technology & Industrial Dynamics)
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.:
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"Endogenous Technological Change,"
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3210, National Bureau of Economic Research, Inc.
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"Sunk Costs, Market Structure, and Growth,"
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Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 895-923, November.
- Karl Shell, 2010. "Inventive Activity, Industrial Organization and Economic Growth," Levine's Working Paper Archive 1408, David K. Levine.
- Radner, Roy, 1972. "Existence of Equilibrium of Plans, Prices, and Price Expectations in a Sequence of Markets," Econometrica, Econometric Society, vol. 40(2), pages 289-303, March.
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