IDEAS home Printed from https://ideas.repec.org/p/koe/wpaper/0915.html

Competing process and quality innovation in a model of occupational choice

Author

Listed:
  • Colin Davis

    (Kobe University, Graduate School of Economics)

  • Yasunobu Tomoda

    (Kyoto University, Institute of Economic Research)

Abstract

We develop a simple model of endogenous growth and occupational choice in which skill differentiated workers choose between three types of employment activity: production, process innovation,and quality innovation. Incumbent firms invest in process innovation to reduce production costs and market entrants invest in quality improvements in order to capture the market from vintage product lines. We use this framework to examine innovation incentives for incumbent firms in an environment of creative destruction and find that there are two plausible and stable patterns of product evolution: a corner equilibrium with quality growth alone, and an interior equilibrium with both productivity growth and quality growth. We also show that the process innovation of an interior equilibrium has important policy implications for economic growth.

Suggested Citation

  • Colin Davis & Yasunobu Tomoda, 2009. "Competing process and quality innovation in a model of occupational choice," Discussion Papers 0915, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:0915
    as

    Download full text from publisher

    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2009/0915.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pietro Peretto & Sjak Smulders, 2002. "Technological Distance, Growth And Scale Effects," Economic Journal, Royal Economic Society, vol. 112(481), pages 603-624, July.
    2. Yeaple, Stephen Ross, 2005. "A simple model of firm heterogeneity, international trade, and wages," Journal of International Economics, Elsevier, vol. 65(1), pages 1-20, January.
    3. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
    4. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
    5. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    6. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, vol. 80(4), pages 796-815, September.
    7. Saint-Paul, Gilles, 2004. "Are intellectual property rights unfair?," Labour Economics, Elsevier, vol. 11(1), pages 129-144, February.
    8. Thompson, Peter, 2001. "The Microeconomics of an R&D-Based Model of Endogenous Growth," Journal of Economic Growth, Springer, vol. 6(4), pages 263-283, December.
    9. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    10. Peretto, Pietro F, 1996. "Sunk Costs, Market Structure, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 895-923, November.
    11. Bottazzi, Laura & Peri, Giovanni, 2003. "Innovation and spillovers in regions: Evidence from European patent data," European Economic Review, Elsevier, vol. 47(4), pages 687-710, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Colin Davis & Yasunobu Tomoda, 2018. "Competing incremental and breakthrough innovation in a model of product evolution," Journal of Economics, Springer, vol. 123(3), pages 225-247, April.
    2. Gray, Elie & Grimaud, André, 2014. "The Lindahl equilibrium in Schumpeterian growth models: Knowledge diffusion, social value of innovations and optimal R&D incentives," IDEI Working Papers 821, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. Petsas Iordanis, 2015. "General Purpose Technologies and their Implications for International Trade," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 47(1), pages 7-35, September.
    4. Piotr Stryszowski, 2005. "Intellectual Property Rights and National R&D Subsidy Policies in a Two-Country Schumpeterian Framework," DEGIT Conference Papers c010_027, DEGIT, Dynamics, Economic Growth, and International Trade.
    5. Gray, Elie & Grimaud, André, 2014. "The Lindahl equilibrium in Schumpeterian growth models: Knowledge diffusion, social value of innovations and optimal R&D incentives," TSE Working Papers 14-469, Toulouse School of Economics (TSE).
    6. Elie Gray & André Grimaud, 2014. "The Lindahl Equilibrium in Schumpeterian Growth Models: Knowledge Diffusion, Social Value of Innovations and Optimal R&D Incentives," CESifo Working Paper Series 4678, CESifo.
    7. Elie Gray & André Grimaud, 2016. "The Lindahl equilibrium in Schumpeterian growth models," Journal of Evolutionary Economics, Springer, vol. 26(1), pages 101-142, March.
    8. Gilad Sorek, 2025. "Schumpeterian growth with variable demand elasticity," Economic Inquiry, Western Economic Association International, vol. 63(4), pages 1110-1126, October.
    9. Jerbashian Vahagn, 2016. "Knowledge licensing in a model of R&D-driven endogenous growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(2), pages 555-579, June.
    10. Colin R. Davis, 2009. "Interregional Knowledge Spillovers And Occupational Choice In A Model Of Free Trade And Endogenous Growth," Journal of Regional Science, Wiley Blackwell, vol. 49(5), pages 855-876, December.
    11. Gehringer, Agnieszka & Prettner, Klaus, 2019. "Longevity And Technological Change," Macroeconomic Dynamics, Cambridge University Press, vol. 23(4), pages 1471-1503, June.
    12. Tom-Reiel Heggedal, 2008. "On R&D and the undersupply of emerging versus mature technologies," Discussion Papers 571, Statistics Norway, Research Department.
    13. Steven Bond‐Smith, 2022. "Discretely innovating: The effect of limited market contestability on innovation and growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 301-327, July.
    14. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2017. "Innovations, growth and participation in advanced economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 14(2), pages 293-351, April.
    15. Takaaki Morimoto, 2018. "Occupational choice and entrepreneurship: effects of R&D subsidies on economic growth," Journal of Economics, Springer, vol. 123(2), pages 161-185, March.
    16. Lin, Hwan C. & Shampine, L.F., 2014. "Finite-length Patents and Functional Differential Equations in a Non-scale R&D-based Growth Model," MPRA Paper 61603, University Library of Munich, Germany.
    17. Garicano, Luis & Rossi-Hansberg, Esteban, 2012. "Organizing growth," Journal of Economic Theory, Elsevier, vol. 147(2), pages 623-656.
    18. Thomas Brenner, 2014. "Science, Innovation and National Growth," Working Papers on Innovation and Space 2014-03, Philipps University Marburg, Department of Geography.
    19. Alberto Bucci, 2014. "Population, competition, innovation, and economic growth with and without human capital investment," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(1), pages 61-84, April.
    20. Jeon, Heesang, 2015. "Knowledge and Contemporary Capitalism in Light of Marx's Value Theory," Thesis Commons g5njk, Center for Open Science.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:koe:wpaper:0915. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kimiaki Shirahama The email address of this maintainer does not seem to be valid anymore. Please ask Kimiaki Shirahama to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/fekobjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.