Heterogeneous Innovations and Growth Under Imperfect Technology Spillovers

Karam Jo () and Seula Kim ()
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Karam Jo: Korea Development Institute
Seula Kim: Pennsylvania State University

No 17581, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study how frictions in learning others' technology, termed "imperfect technology spillovers," impact firm innovation strategies and the aggregate economy through changes in innovation composition. We develop an endogenous growth model that generates strategic innovation decisions, where multi-product firms improve their products via own-innovation and enter new product markets through creative destruction under learning frictions. In our model, firms with technological advantages intensify own-innovation as learning frictions enable them to protect their markets from competitors, thereby reducing creative destruction of rivals. This pattern gets more pronounced when competitive pressure increases exogenously. Using U.S. administrative firm-level data, we provide regression results supporting the model predictions.

Keywords: innovation; technology spillover; endogenous growth; competition (search for similar items in EconPapers)
JEL-codes: L11 L25 O31 O33 O41 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2024-12
New Economics Papers: this item is included in nep-com, nep-cse, nep-gro, nep-ino, nep-sbm and nep-tid
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