Project Evaluation and Organizational Form

Thomas Gehrig, Pierre Regibeau and Katharine Rockett

No 1888, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper analyses the impact of inequality on growth when technical progress is driven by innovations. It is assumed that consumers have hierarchic preferences. As a result inequality affects demand and therefore the incentive to innovate. Whether more inequality is harmful or beneficial for growth depends on the initial distribution. Complementarities between a technical and a pecuniary externality resulting from the innovation process may generate multiple equilibria. Redistribution may push an economy trapped in underdevelopment to a high-growth regime.

Keywords: imperfect communication; Imperfect Information; organizational form (search for similar items in EconPapers)
JEL-codes: D23 D83 L22 (search for similar items in EconPapers)
Date: 1998-05
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Citations: View citations in EconPapers (6)

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