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Quality Ladders, Competition and Endogenous Growth

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  • Michele Boldrin
  • David K Levine

Abstract

We examine a competitive theory in which new ideas are introduced only when diminishing returns to the use of existing ideas sets in. After an idea is introduced, the capital associated with that idea expands, and the price of the idea falls. Once the price falls far enough, it becomes profitable to introduce a new, costlier, idea. The resulting competitive theory is consistent with fixed costs of innovation, no more difficult than the existing theory of monopolistic innovation, and accounts for the same basic facts. However, there is evidence that innovation is driven by diminishing returns on existing ideas – a fact that the existing theory does not account for.
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Suggested Citation

  • Michele Boldrin & David K Levine, 2010. "Quality Ladders, Competition and Endogenous Growth," Levine's Working Paper Archive 661465000000000028, David K. Levine.
  • Handle: RePEc:cla:levarc:661465000000000028
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    References listed on IDEAS

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    Cited by:

    1. Erzo G. J. Luttmer, 2012. "Growth with a Fixed Factor," Working Papers 2012-1, University of Minnesota, Department of Economics.
    2. J. Ignacio Conde-Ruiz & Juan Ramón García & María Navarro, 2008. "The Impact of Immigration on the Regional Growth in Spain," Working Papers 2008-08, FEDEA.
    3. Michele Boldrin & David K Levine, 2007. "All the Interesting Questions, Almost All the Wrong Reasons," Levine's Working Paper Archive 784828000000000706, David K. Levine.
    4. Teng, Faxin & Meier, Claudia & Kamenev, Dmitry & Klein, Martin, 2011. "Trade integration,restructuring and global imbalances --A tale of two countries," MPRA Paper 31946, University Library of Munich, Germany.
    5. Tubadji, Annie & Nijkamp, Peter & Santarelli, Enrico, 2017. "Shacklean Uncertainty and Cultural Embeddedness as Innovation Constraints in the UK," GLO Discussion Paper Series 111, Global Labor Organization (GLO).
    6. José Ignacio Conde Ruiz & Juan Ramón García López & María Navarro, 2008. "Efectos de la Inmigración sobre Crecimiento Regional en España," Economic Reports 09-08, FEDEA.

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