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


  • Eliasson, Gunnar

    (Research Institute of Industrial Economics (IFN))


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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    References listed on IDEAS

    1. Forte, Francesco, 1982. "The Law of Selection in the Public Economy as Compared to the Market Economy," Public Finance = Finances publiques, , vol. 37(2), pages 224-245.
    2. Pelikan, Pavel, 1969. "Language as a Limiting Factor for Centralization," American Economic Review, American Economic Association, vol. 59(4), pages 625-631, Part I Se.
    3. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
    4. Richard R. Nelson, 1981. "Assessing Private Enterprise: An Exegesis of Tangled Doctrine," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 93-111, Spring.
    5. Sidney G. Winter, 1971. "Satisficing, Selection, and the Innovating Remnant," The Quarterly Journal of Economics, Oxford University Press, vol. 85(2), pages 237-261.
    6. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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    More about this item


    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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