Leadership Cycles

Vincenzo Denicolo' () and Piercarlo Zanchettin

No 60683, Institutions and Markets Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: We study a quality-ladder model of endogenous growth that produces stochastic leadership cycles. Over a cycle, industry leaders can innovate several successive times in the same industry, gradually increasing the magnitude of their technological lead before being replaced by a new entrant. Initially, new leaders are eager to enlarge their lead and do much of the research, but if they innovate repeatedly, their propensity to invest in R&D decreases. Eventually they stop doing research altogether, and as they are overtaken a new cycle starts. The model generates a skewed firm size distribution and a deviation from Gibrat’s law that accord with the empirical evidence. We also consider various policy measures, showing that in some cases policy should favour R&D by incumbents, not outsiders, and that stronger patent protection may reduce innovation and growth.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 52
Date: 2010-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/60683/files/NDL2010-035.pdf (application/pdf)

Related works:
Working Paper: Leadership Cycles (2010)
Working Paper: Leadership Cycles (2009)
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:ags:feemim:60683

DOI: 10.22004/ag.econ.60683

Access Statistics for this paper

More papers in Institutions and Markets Papers from Fondazione Eni Enrico Mattei (FEEM) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().