An Asymptotically Non-Scale Endogenous Growth Model

Taiji Harashima

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents an endogenous growth model in which the economy grows without either scale effects or population growth. The key mechanism is substitution between investments in capital and technology when firms face increasing uncompensated knowledge spillovers. The model indicates that, as population increases, firms invest more in capital than in technology because there are more uncompensated knowledge spillovers as a result of both Marshall-Arrow-Romer and Jacobs externalities. Consequently, scale effects asymptotically diminish as population increases and disappear at a sufficiently large population while the economy can grow without population growth. In present-day industrialized economies, therefore, both scale effects and population growth have little influence over economic growth.

Keywords: Endogenous growth; Scale effects; Non scale model; Balanced growth; Knowledge spillovers (search for similar items in EconPapers)
JEL-codes: E10 O33 O41 (search for similar items in EconPapers)
Date: 2010-10-20
New Economics Papers: this item is included in nep-dge and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://mpra.ub.uni-muenchen.de/44393/1/MPRA_paper_44393.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:26025

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