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Profitable Unproductive Innovations

María J. Alvarez-Peláez () and Christian Groth ()
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María J. Alvarez-Peláez: Universidad de Málaga y CentrA, http://www.uma.es/inicio.html

Authors registered in the RePEc Author Service: Maria Jose Alvarez Pelaez ()

No E2003/42, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: The present paper studies resource allocation in an expanding product variety framework à la Romer (1990). We consider the limiting case where net returns to specialization are zero and, therefore, R&D is completely useless, socially. Nevertheless, the market equilibrium involves allocation of ressources to R&D, and this wasteful allocation may take place even in a steady state.

Keywords: Research and development (R&D); Expanding product variety; Creative destruction. (search for similar items in EconPapers)
JEL-codes: O33 O41 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2003
New Economics Papers: this item is included in nep-dev
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