IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/3099.html
   My bibliography  Save this paper

Quality Ladders in the Theory of Growth

Author

Listed:
  • Gene M. Grossman
  • Elhanan Helpman

Abstract

We develop a model of repeated product improvements in a continuum of sectors. Each product follows a stochastic progression up a quality ladder. Progress is not uniform across sectors, so an equilibrium distribution of qualities evolves over time. But the rate of aggregate growth is constant. The growth rate responds to profit incentives in the R&D sector. We explore the welfare properties of our model. Then we relate our approach to an alternative one that views product innovation as a process of generating an ever expanding range of horizontally differentiated products. Finally, we apply the model to issues of resource accumulation and international trade.

Suggested Citation

  • Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3099
    Note: EFG
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w3099.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(3), pages 395-410.
    4. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-585, May.
    5. Partha Dasgupta & Joseph Stiglitz, 1980. "Uncertainty, Industrial Structure, and the Speed of R&D," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 1-28, Spring.
    6. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(2), pages 429-436.
    7. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-1171, September.
    8. Giovanni Dosi, 2000. "Sources, Procedures, and Microeconomic Effects of Innovation," Chapters, in: Innovation, Organization and Economic Dynamics, chapter 2, pages 63-114, Edward Elgar Publishing.
    9. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    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. Stolpe, Michael, 1995. "Technology and the dynamics of specialization in open economies," Open Access Publications from Kiel Institute for the World Economy 738, Kiel Institute for the World Economy (IfW Kiel).
    2. Erzo G. J. Luttmer, 2021. "Dynamic Urn-Ball Discovery," Working Papers 789, Federal Reserve Bank of Minneapolis.
    3. Etro, Federico, 2019. "Monopolistic competition for the market with heterogeneous firms," Economics Letters, Elsevier, vol. 179(C), pages 9-12.
    4. Sedgley, Norman, 2002. "Asymmetric Knowledge Spillovers in a Model of Regional Innovation and Growth," The Review of Regional Studies, Southern Regional Science Association, vol. 32(2), pages 187-206, Summer/Fa.
    5. Peretto, Pietro F., 1999. "Cost reduction, entry, and the interdependence of market structure and economic growth," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 173-195, February.
    6. Nelson, Kelly P. & Parton, Lee C. & Brown, Zachary S., 2022. "Biofuels policy and innovation impacts: Evidence from biofuels and agricultural patent indicators," Energy Policy, Elsevier, vol. 162(C).
    7. Gancia, Gino & Zilibotti, Fabrizio, 2005. "Horizontal Innovation in the Theory of Growth and Development," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 3, pages 111-170, Elsevier.
    8. Leibowicz, Benjamin D., 2018. "Welfare improvement windows for innovation policy," Research Policy, Elsevier, vol. 47(2), pages 390-398.
    9. Harabi, Najib, 1994. "Technischer Fortschritt in der Schweiz: Empirische Ergebnisse aus industrieökonomischer Sicht [Technischer Fortschritt in der Schweiz:Empirische Ergebnisse aus industrieökonomischer Sicht]," MPRA Paper 6725, University Library of Munich, Germany.
    10. Helpman, Elhanan, 1992. "Endogenous macroeconomic growth theory," European Economic Review, Elsevier, vol. 36(2-3), pages 237-267, April.
    11. MARTINS, Ana Paula, 2015. "Increasing Returns And Endogenous Growth: Market Size And Taste For Variety," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(5), pages 3-33, June.
    12. Aldieri, Luigi & Aprile, Maria Carmela & Vinci, Concetto Paolo, 2015. "R&D Spillovers Effects on strategic behaviour of Large International Firms," MPRA Paper 63402, University Library of Munich, Germany.
    13. Levin, Mark (Левин, Марк) & Matrosova, Kseniya (Матросова, Ксения), 2017. "Development and Analysis of Economic Models of Innovation Incentives [Разработка И Исследование Экономических Моделей Стимулирования Инновационных Процессов]," Working Papers 061713, Russian Presidential Academy of National Economy and Public Administration.
    14. Vincenzo Merella, 2006. "Engel’s curve and product differentiation: A dynamic analysis of the effects of quality on consumer’s choice," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(2), pages 157-182, June.
    15. Harabi, Najib, 1992. "Determinanten des Technischen Fortschritts: Eine Empirische Analyse für die Schweiz [Determinants of Technical Change: An Empirical Analysis for Switzerland]," MPRA Paper 26217, University Library of Munich, Germany.
    16. Robert M. Hunt, 1999. "Nonobviousness and the incentive to innovate: an economic analysis of intellectual property reform," Working Papers 99-3, Federal Reserve Bank of Philadelphia.
    17. Smulders, Sjak & van de Klundert, Theo, 1995. "Imperfect competition, concentration and growth with firm-specific R & D," European Economic Review, Elsevier, vol. 39(1), pages 139-160, January.
    18. Nguyen, Thang, 2004. "Technological Progress in Races for Product Supremacy," MPRA Paper 235, University Library of Munich, Germany, revised 18 Jul 2006.
    19. Harabi, Najib, 1991. "Einflussfaktoren von Forschung und Entwicklung in der Schweizer Industrie: Ergebnisse einer schriftlichen Expertenbefragung [Factors Affecting Research and Development - Results of a Survey in Swis," MPRA Paper 5257, University Library of Munich, Germany.
    20. Robert M. Hunt, 2004. "Patentability, Industry Structure, and Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 401-425, September.

    More about this item

    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:nbr:nberwo:3099. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.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.