Social Learning and Innovation Cycles (revision of DP#1516, The Dynamics of Innovation)
We study social learning and innovation in an overlapping generations model, emphasizing the trade-off between marginal innovation (combining existing technologies) and radical innovation (breaking new ground). We characterize both short-term and long-term dynamics of innovation, and the intergenerational accumulation of knowledge. Innovation cycles emerge endogenously, but the number of cycles is finite almost surely, and radical innovation terminates infinite time. We identify a negative relationship between past successes and the magnitude of radical innovation, combining insights from the multi-armed bandit literature with a spatial representation of innovation. Past successes reduce the incremental value of experimentation, and result in less ambitious innovation. In our framework, patents promote radical innovation through two channels: by increasing the expected benefit of radical innovation and by increasing the cost of marginal innovation. Our analysis suggests that sustaining radical innovation in the long-run requires external intervention.
|Date of creation:||06 Feb 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.kellogg.northwestern.edu/research/math/
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Acemoglu, Daron & Gancia, Gino & Zilibotti, Fabrizio, 2012.
"Competing engines of growth: Innovation and standardization,"
Journal of Economic Theory,
Elsevier, vol. 147(2), pages 570-601.e3.
- Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing engines of growth: innovation and standardization," IEW - Working Papers 483, Institute for Empirical Research in Economics - University of Zurich.
- Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing engines of growth: Innovation and standardization," Economics Working Papers 1358, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2010.
- Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing Engines of Growth: Innovation and Standardization," Levine's Working Paper Archive 661465000000000243, David K. Levine.
- Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing Engines of Growth: Innovation and Standardization," NBER Working Papers 15958, National Bureau of Economic Research, Inc.
- Garicano, Luis & Rossi-Hansberg, Esteban, 2012.
Journal of Economic Theory,
Elsevier, vol. 147(2), pages 623-656.
- Aghion Philippe & Bolton, Patrick & Harris Christopher & Jullien Bruno, 1991.
"Optimal learning by experimentation,"
CEPREMAP Working Papers (Couverture Orange)
- Steven Callander, 2011. "Searching and Learning by Trial and Error," American Economic Review, American Economic Association, vol. 101(6), pages 2277-2308, October.
- McLennan, Andrew, 1984. "Price dispersion and incomplete learning in the long run," Journal of Economic Dynamics and Control, Elsevier, vol. 7(3), pages 331-347, September.
When requesting a correction, please mention this item's handle: RePEc:nwu:cmsems:1546. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fran Walker)
If references are entirely missing, you can add them using this form.