A Dynamic Model of the Choice of Technology in Economic Development

Haiwen Zhou and Ruhai Zhou
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Ruhai Zhou: Department of Mathematics and Statistics, Old Dominion University, Norfolk, VA 23529, USA

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2016, vol. 11, issue 3, 498-518

Abstract: In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as a fixed cost of production, increasing returns in the manufacturing sector exist. In the unique steady state, first, when individuals become more patient, the savings rate increases while the level of an individual¡¯s income decreases. Second, an increase in population or percentage of income spent on manufactured goods does not change steady-state technology while the level of an individual¡¯s income decreases. Third, an increase in the wage rate leads manufacturing firms to choose more advanced technologies and the steady-state capital stock increases. Finally, an increase in the level of subsidies to technology adoption does not change steady-state technology.

Keywords: choice of technology; overlapping-generations model; unemployment; economic development; increasing returns (search for similar items in EconPapers)
JEL-codes: C13 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: A Dynamic Model of the Choice of Technology in Economic Development (2017)
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