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Growth Through Heterogeneous Innovations

  • Ufuk Akcigit
  • William R. Kerr

We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multiproduct firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.

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File URL: http://www2.census.gov/ces/wp/2012/CES-WP-12-08.pdf
File Function: First version, 2012
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Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 12-08.

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Length: 80 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:cen:wpaper:12-08
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