This paper studies the dynamics of fundamental research. We develop a simple model where researchers allocate their effort between improving existing fields and inventing new ones. A key assumption is that scientists derive utility from recognition from other scientists. We show that the economy can be either in a regime where new fields are constantly invented, and then converges to a steady state, or in a cyclical regime where periods of innovation alternate with periods of exploitation. We characterize the cyclicals dynamics of the economy, show that indeterminacy may appear, and establish some comparative statics and welfare implications.
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|Date of creation:||Nov 2006|
|Date of revision:|
|Publication status:||Published in Journal of Economic Theory, vol. 145, n. 5, September 2010, p. 1890-1920.|
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