Learning by Observation within the Firm
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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|Date of creation:||1993|
|Date of revision:|
|Contact details of provider:|| Postal: UNIVERSITY OF CAMBRIDGE, RESEARCH PROJECT ON RISK, INFORMATION AND QUANTITY SIGNALS IN ECONOMICS(E.S.R.C.), DEPARTMENT OF APPLIED ECONOMICS, SIDGWICK AV. CAMBRIDGE CB3 9DEDE U.K..|
Web page: http://www.econ.cam.ac.uk/
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- Paul M Romer, 1999.
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Levine's Working Paper Archive
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214, Massachusetts Institute of Technology (MIT), Department of Economics.
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"Nash equilibrium search for the best alternative,"
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Elsevier, vol. 30(1), pages 139-152, June.
- 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.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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