Basic and Applied Research: A Welfare Analysis

Kunihiko Konishi ()
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Kunihiko Konishi: Graduate School of Economics, Osaka University

No 15-08, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This study constructs a variety expansion growth model that integrates basic research to analytically examine its effects on household welfare. In our approach, the research sector consists of applied and basic research components. The former creates blueprints and expands the variety of goods available for consumption, whereas the latter adds to the stock of public knowledge. The two sectors interplay through knowledge spillovers. The analysis reveals two key results. First, the steady-state welfare-maximizing level of basic research is below the steady-state growth-maximizing level. Second, a reduction in the level of basic research raises household welfare if the level of basic research is initially at the steady-state welfare-maximizing level.

Keywords: Basic research; Innovation; Endogenous growth; Welfare analysis (search for similar items in EconPapers)
JEL-codes: H41 O31 O41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2015-05
New Economics Papers: this item is included in nep-ino, nep-knm and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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