Project Evaluation and Organizational Form
Pierre Regibeau () and
No 1888, CEPR Discussion Papers from C.E.P.R. Discussion Papers
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)
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