Exploration and Exploitation - The Role of Entrepreneurship and R+D in the Process of Innovation

Max Keilbach and Mark Sanders

No 2007-108, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: We formulate a model that explicitly separates two functions in the innovation process: The introduction of new goods and the quality improvement of existing goods. While the latter is performed by the corporate R+D sector, the first is performed by entrepreneurs. We show that in a three sector economy, which also includes a producing sector, there exists a stable non trivial allocation of labor to production, innovation and entrepreneurship. We compute the steady state allocation of labor to production, R+D and Entrepreneurship. We show that the innovation rate decreases if one of the innovative sectors does not exist.

Keywords: Innovation; Variety Expansion; Quality Ladders; Entrepreneurship; R+D Sector. (search for similar items in EconPapers)
JEL-codes: O31 O41 (search for similar items in EconPapers)
Date: 2007-12-20
New Economics Papers: this item is included in nep-ent, nep-ino, nep-ipr, nep-pr~ and nep-mic
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2007-108

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