The role of diminishing returns in neo-Schumpeterian growth theory
This paper generalizes Segerstrom , a dynamic general equilibrium model of endogenous growth through quality improvements in which innovation and imitation are modeled as the outcomes of research and development (R&D) races. Specific factors introduced into the technologies of both R&D activities achieve diminishing returns to scale in R&D. The comparative-static results of subsidies to R&D activities depend on the degree of diminishing returns to scale in R&D. When there is (is not) a sufficient degree of diminishing returns to R&D, a subsidy to innovative activity increases (decreases) innovative activity.
Volume (Year): 12 (1998)
Issue (Month): 2 ()
|Note:||Received: July 8, 1994; revised version: June 9, 1997|
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