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Competition-Led Endogenous Growth With Localized Technological Change

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  • Edoardo Gaffeo

Abstract

This paper presents an imperfect competition framework where growth is described as successful R&D investments in decreasing production-cost technologies. Innovation and imitation processes are modelled as activities requiring different amounts of investment, whose outcome is uncertaint both as regards the time it takes to occur and the amount of effective increase in productivity it allows. Furthermore, technological change is governed by localized spillovers, so that it can be analytically treated using the machinery of Markovian random fields. Preliminary results obtained through simulation exercises and a 'Mean Field' approximation allow us to evaluate how alternative assumptions on the nature of localization of technological change affect the market structure and the rate of growth of the average productivity of an imperfectly competitive economy. Hence, it is possible to provide some 'micro' insights to the growing macroeconomic literature dealing with local interaction among producers.

Suggested Citation

  • Edoardo Gaffeo, 1999. "Competition-Led Endogenous Growth With Localized Technological Change," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(3), pages 225-251.
    • Handle: RePEc:taf:ecinnt:v:8:y:1999:i:3:p:225-251
    DOI: 10.1080/10438599900000010
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    References listed on IDEAS

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    1. Brock, W.A. & Durlauf, S.N., 1995. "Discrete Choice with Social Interactions I: Theory," Working papers 9521, Wisconsin Madison - Social Systems.
    2. Giovanni Dosi & Christopher Freeman & Richard Nelson & Gerarld Silverberg & Luc Soete (ed.), 1988. "Technical Change and Economic Theory," LEM Book Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy, number dosietal-1988, April.
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    More about this item

    Keywords

    Heterogeneity; Schumpeterian hypothesis; Localized technological change; Local interaction JEL Classification: C60; L22; O33; O40;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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