This article presents a Schumpeterian model where the engine of growth is in the microeconomic structure of the patent races. Under decreasing marginal productivity and endogenous entry in the R&D sector, the equilibrium is characterized by small firms investing too little and the growth process is dynamically inefficient; the optimal policy for innovation always implies R&D subsidies. When the incumbent monopolists are leaders in patent races with endogenous entry, they engage in larger R&D investment and their persistent leadership enhances growth. In a multicountry setup, growth is driven by innovations in the largest country and increases with its relative size and openness. Finally, I derive the optimal R&D subsidy from the point of view of a single country, and provide a new case for international coordination of R&D policies.

Etro, F. (2008). Growth leaders. JOURNAL OF MACROECONOMICS, 30(3), 1148-1172 [10.1016/j.jmacro.2007.04.003].

Growth leaders

ETRO, FEDERICO
2008

Abstract

This article presents a Schumpeterian model where the engine of growth is in the microeconomic structure of the patent races. Under decreasing marginal productivity and endogenous entry in the R&D sector, the equilibrium is characterized by small firms investing too little and the growth process is dynamically inefficient; the optimal policy for innovation always implies R&D subsidies. When the incumbent monopolists are leaders in patent races with endogenous entry, they engage in larger R&D investment and their persistent leadership enhances growth. In a multicountry setup, growth is driven by innovations in the largest country and increases with its relative size and openness. Finally, I derive the optimal R&D subsidy from the point of view of a single country, and provide a new case for international coordination of R&D policies.
Articolo in rivista - Articolo scientifico
Endogenous market structures
English
1148
1172
Etro, F. (2008). Growth leaders. JOURNAL OF MACROECONOMICS, 30(3), 1148-1172 [10.1016/j.jmacro.2007.04.003].
Etro, F
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/6135
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