Optimal planning of technological options and productivity distribution dynamics

Orlando Gomes

Economic Modelling, 2024, vol. 130, issue C

Abstract: How does the distribution of productivity levels between firms change over time? What are the drivers of imitation and innovation? How much will production units invest in research and/or technology adoption? These are some of the questions often addressed by economists to enhance our understanding about technological progress and economic growth. This study contributes to the literature by examining the dynamics of an intertemporal utility maximization model in which agents’ choices on whether to innovate or imitate are endogenous. These choices determine the evolution, and systematic repositioning, of the distribution of productivity. Under plausible assumptions, the setup is flexible enough to allow for compression or expansion of the distribution (i.e., for convergence or divergence between technological capabilities). The normative implication is that the dynamics of productivity distribution is not the inevitable outcome of optimal decentralized choices in an uncontrollable environment. Instead, there are conditioning factors that public authorities can leverage (e.g., through patent policies) to achieve desired social goals (i.e., to improve welfare).

Keywords: Productivity distribution; Innovation; Technology adoption; Technology frontier; Endogenous growth; Intertemporal optimization (search for similar items in EconPapers)
JEL-codes: O31 O33 O40 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:130:y:2024:i:c:s0264999323004054

DOI: 10.1016/j.econmod.2023.106593

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