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Learning by Observation Within the Firm

  • Dutta, J.
  • Prasad, K.

This paper studies the effects of learning by observation on the production and wage decisions of a firm . Workers can improve their productivity by observing others within the firm. The firm chooses a wage profile, which determines the amount of research done within the firm. Some workers may choose to free ride on the research of others. We examine whether the firm will have increasing returns to scale in production. It turns out that the production function either satisfies the efficiency wage hypothesis, or has increasing returns to scale. The objectives of the firm determine which of the two regions its production schedule lies in.

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Paper provided by Department of Economics, Florida State University in its series Working Papers with number 1993_07_03.

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Length: 32 pages
Date of creation: 1993
Date of revision:
Handle: RePEc:fsu:wpaper:1993_07_03
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Web page: http://www.coss.fsu.edu/economics/

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  1. Moore, John, 1992. "The firm as a collection of assets," European Economic Review, Elsevier, vol. 36(2-3), pages 493-507, April.
  2. Reinganum, Jennifer F., . "Nash Equilibrium Search for the Best Alternative," Working Papers 413, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. M. L. Weitzman, 1978. "Optimal Search for the Best Alternative," Working papers 214, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  5. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  6. Prescott, Edward C & Boyd, John H, 1987. "Dynamic Coalitions: Engines of Growth," American Economic Review, American Economic Association, vol. 77(2), pages 63-67, May.
  7. Bhattacharya, Sudipto & Chatterjee, Kalyan & Samuelson, Larry, 1986. "Sequential Research and the Adoption of Innovations," Oxford Economic Papers, Oxford University Press, vol. 38(0), pages 219-43, Suppl. No.
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