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The role of diminishing returns in neo-Schumpeterian growth theory

Author

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  • Cindy Houser

    (Department of Economics and Finance, Texas A&M International University, Laredo, TX 78041, USA)

Abstract

This paper generalizes Segerstrom [5], 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.

Suggested Citation

  • Cindy Houser, 1998. "The role of diminishing returns in neo-Schumpeterian growth theory," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 335-347.
    • Handle: RePEc:spr:joecth:v:12:y:1998:i:2:p:335-347
    Note: Received: July 8, 1994; revised version: June 9, 1997
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    Cited by:

    1. Mukoyama, Toshihiko, 2003. "Innovation, imitation, and growth with cumulative technology," Journal of Monetary Economics, Elsevier, vol. 50(2), pages 361-380, March.
    2. Stadler, Manfred, 2015. "Innovation, industrial dynamics and economic growth," University of Tübingen Working Papers in Business and Economics 84, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.

    More about this item

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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