Focusing device as innovation mechanism and cluster growth

Tsutomu Harada

Economics of Innovation and New Technology, 2014, vol. 23, issue 1, 49-62

Abstract: This paper models a focusing device of innovation in which a cluster has an o-ring type production function and each technology component endogenously upgrades its quality. We show that provided the magnitude of innovation is the same across technology components, competitive equilibrium is an efficient mechanism by which core technology-driven innovations emerge with expanding inequality among clusters. Our result is in sharp contrast to bottleneck-removed innovation which is widely accepted. The inefficiency arises, however, when low-powered incentives, such as cost plus contracting, are employed to reward innovation. In this case, the corresponding factor price provides erroneous information regarding the potential benefits of innovation, which should be corrected by some form of policy intervention.

Date: 2014
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10438599.2013.806407 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ecinnt:v:23:y:2014:i:1:p:49-62

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/GEIN20

DOI: 10.1080/10438599.2013.806407

Access Statistics for this article

Economics of Innovation and New Technology is currently edited by Professor Cristiano Antonelli

More articles in Economics of Innovation and New Technology from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().