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Competitive Innovation with Codified And Tacit Knowledge

  • Tetsugen Haruyama


    (Graduate School of Economics, Kobe University)

R&D-based models of endogenous technical progress rest on a premise that technical progress is driven by profit-seeking entrepreneurs. This literature led to a dominant view that endogenous technical advance is not consistent with perfect competition with constant returns to scale. Departing from this dominant perspective, we demonstrate that technical progress endogenously occurs in a perfectly competitive economy under constant returns to scale in rivalrous inputs. Our result is based on a hypothesis that R&D creates codified and tacit knowledge as joint products. Empirical and case studies are discussed to support the hypothesis. Using the model, we demonstrate that stronger patent protection can encourage or discourage R&D, depending on the size of an economy.

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Paper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 0905.

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Length: 32pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:koe:wpaper:0905
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