IDEAS home Printed from https://ideas.repec.org/p/qed/wpaper/801.html
   My bibliography  Save this paper

Strategic Innovation and Economic Growth

Author

Listed:
  • Allen C. Head
  • Beverly J. Lapham

Abstract

Strategic interaction among oligopolistic innovators and its implications for economic growth are examined in two dynamic computable general equilibrium models. In each environment, technologies for producing a final good are such that the profits of any intermediate good producer depend on the quality of all intermediate goods. This leads to strategic innovation choices which affect equilibrium growth rates. In the first economy, these spillovers lead to long-run output growth rates which fluctuate around a constant level. This level is affected by the degree of spillovers, the length of firms' planning horizons, the number of firms, and average innovation costs. In this economy a firm unequivocally benefits from innovation by other firms. A second economy is also considered in which innovation by other firms may harm intermediate goods producers. This results as innovation leads to rising factor costs. This second economy also exhibits continual output growth but at a decreasing rate. The economy can easily be modified to exhibit long-run growth rates which fluctuate about a constant. We consider two examples: population growth at a constant rate and intermediate goods' technologies affected by average quality.

Suggested Citation

  • Allen C. Head & Beverly J. Lapham, 1990. "Strategic Innovation and Economic Growth," Working Papers 801, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:801
    as

    Download full text from publisher

    File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_801.pdf
    File Function: First version 1990
    Download Restriction: no

    More about this item

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. Canadian Macro Study Group

    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:qed:wpaper:801. 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: (Mark Babcock). General contact details of provider: http://edirc.repec.org/data/qedquca.html .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.