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Invention and Bounded Learning by Doing


  • Alwyn Young


This paper presents a model of the interaction between invention and learning by doing. Learning depends upon invention in that learning by doing is viewed as the serendipitous exploration of the finite productive potential of invented technologies. At the same time, the profitability of costly invention is dependent upon learning in that costs of production depend upon the society's aggregate historical learning experience. The resulting model is a true hybrid. With small markets, the profitability of invention is low, and hence the rate of invention becomes the constraining factor in growth. With large markets, invention is very profitable and tends to pull ahead of the society's learning experience. The consequent growing gap between the technological frontier and the society's industrial maturity squeezes returns, leading to an equilibrium in which the rate of invention (and growth) is paced by the society's rate of learning.

Suggested Citation

  • Alwyn Young, 1991. "Invention and Bounded Learning by Doing," NBER Working Papers 3712, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3712
    Note: EFG

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    References listed on IDEAS

    1. Levhari, David & Sheshinski, Eytan, 1973. "Experience and Productivity in the Israel Diamond Industry," Econometrica, Econometric Society, vol. 41(2), pages 239-253, March.
    2. 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.
    3. Rivera-Batiz, Luis A. & Romer, Paul M., 1991. "International trade with endogenous technological change," European Economic Review, Elsevier, vol. 35(4), pages 971-1001, May.
    4. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
    5. Drew Fudenberg & Jean Tirole, 1983. "Learning-by-Doing and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 522-530, Autumn.
    6. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 369-405.
    7. Marvin B. Lieberman, 1984. "The Learning Curve and Pricing in the Chemical Processing Industries," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 213-228, Summer.
    8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Patrick Artus, 1993. "Croissance endogène : revue des modèles et tentatives de synthèse," Revue Économique, Programme National Persée, vol. 44(2), pages 189-228.

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