Process Spillovers and Growth

Shravan Luckraz

Journal of Optimization Theory and Applications, 2008, vol. 139, issue 2, No 7, 315-335

Abstract: Abstract This paper develops an R&D based endogenous growth model in which the firm’s free-riding behavior, prompted by an incomplete technological protection at the industry level, can drive economic growth. Unlike existing endogenous growth models, it shows how free-riding behavior and process spillovers can mutually promote dynamic competition at the industry level and how they constitute a major source of growth in the economy. In the dynamic general equilibrium model that we propose, the representative industry is a duopoly that consists of a leader who innovates and a laggard who freerides by exploiting the source of intraindustry spillover. The main results show that the innovation strategies of the two firms can be dynamically strategic complements if a large technology gap prevails and that a fall in the level of technological protection can enhance economic growth.

Keywords: Imitation; Innovation; Spillovers; Technology gap; Endogenous growth; Applied differential games (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10957-008-9425-z

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