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A Behavioral-Institutional Model of Endogenous Growth and Induced Technical Change


  • Morris Altman


Technological change is modeled as endogenous in the sense that it is affected by economic, behavioral, and institutional variables. Technological change is especially affected by changes in relative input prices and their level, of which the price of labor is particularly important. Input prices are affected by institutional variables. Such prices also impact on the firm's efficiency, which in turn affects growth rates as well as the rate of technical change. As relative factor prices or their level increase, firms are induced to innovate or adopt extant technology to remain competitive or to maintain current profit rates. High wage firms can be expected to engage in such induced technological change, leading the growth process thereby yielding lower unit costs and increasing the level of material welfare. Relatively low wage economies can be locked into a state of economic inefficiency and laggard technological progress, especially in the long run.

Suggested Citation

  • Morris Altman, 2009. "A Behavioral-Institutional Model of Endogenous Growth and Induced Technical Change," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(3), pages 685-714.
  • Handle: RePEc:mes:jeciss:v:43:y:2009:i:3:p:685-714
    DOI: 10.2753/JEI0021-3624430306

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    Cited by:

    1. Mehmet Ugur, 2013. "Governance, market power and innovation: evidence from OECD countries," Chapters,in: Governance, Regulation and Innovation, chapter 2, pages 25-57 Edward Elgar Publishing.
    2. Teraji, Shinji, 2011. "An economic analysis of social exclusion and inequality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 217-223, May.
    3. Ugur, Mehmet, 2012. "Market Power, Governance and Innovation: OECD Evidence," MPRA Paper 44141, University Library of Munich, Germany.
    4. Altman, Morris, 2014. "Cooperative organizations as an engine of equitable rural economic development," Working Paper Series 3625, Victoria University of Wellington, School of Economics and Finance.
    5. Altman, Morris, 2014. "Insights from behavioral economics on how labor markets work," Working Paper Series 3466, Victoria University of Wellington, School of Economics and Finance.

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