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Catch-up and Fall-back through Innovation and Imitation

  • Jess Benhabib
  • Jesse Perla
  • Christopher Tonetti

Will fast growing emerging economies sustain rapid growth rates until they "catch-up" to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally "fallback" relative to the frontier? This paper models agents growing as a result of investments in innovation and imitation. Imitation facilitates technology diffusion, with the productivity of imitation modeled by a catch-up function that increases with distance to the frontier. The resulting equilibrium is an endogenous segmentation between innovators and imitators, where imitating agents optimally choose to "catch-up" or "fall-back" to a productivity ratio below the frontier.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18091.

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Date of creation: May 2012
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Publication status: published as Jess Benhabib & Jesse Perla & Christopher Tonetti, 2014. "Catch-up and fall-back through innovation and imitation," Journal of Economic Growth, Springer, vol. 19(1), pages 1-35, March.
Handle: RePEc:nbr:nberwo:18091
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