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Growth and ideas in a perfectly competitive world

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  • Boitier, Vincent

Abstract

Are ideas, increasing returns to scale, and perfect competition compatible? To address this fundamental question, I build a purposefully simple model of growth and ideas with two salient features: (i) firms raise capital from shareholders, and (ii) the production function shows decreasing returns to scale in the stock of ideas and in labor. I obtain two noticeable results from this model. First, contrary to conventional wisdom, I show that ideas, increasing returns to scale, and a competitive equilibrium are tenable. Second, I underline that the model has a balanced growth equilibrium similar to the one founded in the semi-endogenous models.

Suggested Citation

  • Boitier, Vincent, 2020. "Growth and ideas in a perfectly competitive world," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 370-376.
    • Handle: RePEc:eee:streco:v:53:y:2020:i:c:p:370-376
    DOI: 10.1016/j.strueco.2019.06.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Growth theory; Ideas; Increasing return to scale; Competitive equilibrium;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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