Endogenous technical change in a competitive economy

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URL:	https://ub-madoc.bib.uni-mannheim.de/2852
URN:	urn:nbn:de:bsz:180-madoc-28521
Document Type:	Working paper
Year of publication:	1999
The title of a journal, publication series:	Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung
Volume:	99-53
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series:	Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject:	330 Economics
Classification:	JEL: D41 D92 O4 E24 J30 D24 ,
Subject headings (SWD):	Technischer Fortschritt , Endogenes Wirtschaftswachstum , Intertemporales Gleichgewicht , Vollkommene Konkurrenz , Wohlfahrtseffekt , Produktivität
Keywords (English):	endegenous technical change , perfect competition , productivity growth , wages , employment
Abstract:	We develop a model of endogenous growth in an economy with competitive markets. Technical change arises from the intentional actions of entrepreneurs looking for profits. Opportunities for such profits stem from inframarginal rents. This provides a counterexample to the widespread view that endogenous technical change is possible only if innovating firms can expect to reap monopoly or oligopoly rents. The model has a unique equilibrium, which involves steady growth at a positive rate. Equilibrium growth is inefficiently low because knowledge spillover effects are neglected. The inefficiency can be eliminated by an interest rate subsidy.
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