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Catch-up and fall-back through innovation and imitation

  • Jess Benhabib

    ()

  • Jesse Perla

    ()

  • Christopher Tonetti

    ()

Will fast growing emerging economies sustain rapid growth rates until they “catch-up” to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally “fall-back” relative to the frontier? This paper models agents growing as a result of investments in innovation and imitation. Imitation facilitates technology diffusion, with the productivity of imitation modeled by a catch-up function that increases with distance to the frontier. The resulting equilibrium is an endogenous segmentation between innovators and imitators, where imitating agents optimally choose to “catch-up” or “fall-back” to a productivity ratio below the frontier. Copyright Springer Science+Business Media New York 2014

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Article provided by Springer in its journal Journal of Economic Growth.

Volume (Year): 19 (2014)
Issue (Month): 1 (March)
Pages: 1-35

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Handle: RePEc:kap:jecgro:v:19:y:2014:i:1:p:1-35
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