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Path dependence and induced innovation

Author

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  • Karsten Wasiluk

    () (Department of Economics, University of Konstanz, Germany)

Abstract

This paper presents an endogenous growth model that captures the origins of path dependence and technological lock-in and introduces a mechanism of induced innovation, which can trigger new research. Imperfect spillovers of secondary development can make the development of new technologies unattractive until research ceases in the long run. Changes in the relative supply of primary factors act as a stimulus for research as new technologies are better suited for the new environment. A simulation using changes of crude oil prices in the US shows the quantitative significance of the model's implications. The model is able to explain long waves of economic development where growth cycles are triggered by changes in the relative factor supply. It also provides a new rationale for governmental regulations such as Pigouvian taxes and pollution permits as they can stimulate innovation and provide the base for the development of "green" technologies.

Suggested Citation

  • Karsten Wasiluk, 2015. "Path dependence and induced innovation," Working Paper Series of the Department of Economics, University of Konstanz 2015-22, Department of Economics, University of Konstanz.
  • Handle: RePEc:knz:dpteco:1522
    as

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    File URL: http://www.uni-konstanz.de/FuF/wiwi/workingpaperseries/WP_22_Wasiluk_2015.pdf
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    References listed on IDEAS

    as
    1. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    2. F. M. Scherer, 1986. "Innovation and Growth: Schumpeterian Perspectives," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691027, September.
    3. Kiley, Michael T, 1999. "The Supply of Skilled Labour and Skill-Biased Technological Progress," Economic Journal, Royal Economic Society, vol. 109(458), pages 708-724, October.
    4. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Path Dependence; Induced Innovation; Directed Technological Change; Growth Cycles;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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