Optimal Technology Policy with Imitation and Risk-Averting Households
A Schumpeterian growth model is constructed where R&D firms innovate to produce better versions of the products or imitate to copy existing innovations. Because firms cannot use their innovations or imitations as collateral, they finance their investment by issuing shares. Households save by purchasing these shares. The government affects the level of profits through competition policy. The main findings are the following. A small imitation subsidy slows down growth. In the first-best optimum collusion is socially optimal, but when the government cannot discriminate between innovation and imitation, it should promote product market competition.
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- Vesa Kanniainen & Rune Stenbacka, 2000. "Endogenous Imitation and Implications for Technology Policy," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(2), pages 360-360, June.
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"Innovative vs. imitative R&D and economic growth,"
Journal of Development Economics,
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"Competition, Imitation and Growth with Step-by-Step Innovation,"
Review of Economic Studies,
Oxford University Press, vol. 68(3), pages 467-492.
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- Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
- Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
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