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Innovative Change, Dynamic Market Allocation and Long-Term Stability of Economic Growth

Author

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  • Eliasson, Gunnar

    (Research Institute of Industrial Economics (IFN))

Abstract

Market competition is central to innovative activity, the diffusion process and macro-economic productivity growth. Productivity growth at all levels comes about through institutional reconfiguration in response to the ongoing market process. Stable and sustained long-term growth in output requires the continuous creation of new technological and commercial solutions to production and marketing problems and exits of outmoded institutions. What is needed, in short, is a continuous turnover of monopoly rents that preserves diversity of economic structure. This means, most importantly, that innovative activity or technical change at the micro market level cannot be treated as an exogenous force, independent of the market process. Hence, discussion of socially optimal choices of technology becomes irrelevant.

Suggested Citation

  • Eliasson, Gunnar, 1986. "Innovative Change, Dynamic Market Allocation and Long-Term Stability of Economic Growth," Working Paper Series 156, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0156
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    More about this item

    Keywords

    Innovation; growth; institutional change; optimal choice; micro-to-macro model;

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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