The role of diminishing returns in neo-Schumpeterian growth theory |
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Authors: | Cindy Houser |
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Institution: | (1) Department of Economics and Finance, Texas A&M International University, Laredo, TX 78041, USA, US |
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Abstract: | Summary. This paper generalizes Segerstrom 5], a dynamic general equilibrium model of endogenous growth through quality improvements
in which innovation and imitation are modeled as the outcomes of research and development (R&D) races. Specific factors introduced
into the technologies of both R&D activities achieve diminishing returns to scale in R&D. The comparative-static results of
subsidies to R&D activities depend on the degree of diminishing returns to scale in R&D. When there is (is not) a sufficient
degree of diminishing returns to R&D, a subsidy to innovative activity increases (decreases) innovative activity.
Received: July 8, 1994; revised version: June 9, 1997 |
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Keywords: | JEL Classification Numbers: O30 O41 |
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