Optimal Technology Policy with Imitation and Risk-Averting Households

Tapio Palokangas

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: A Schumpeterian growth model is constructed where R&D firms innovate to produce better versions of the products or imitate to copy existing innovations. Because firms cannot use their innovations or imitations as collateral, they finance their investment by issuing shares. Households save by purchasing these shares. The government affects the level of profits through competition policy. The main findings are the following. A small imitation subsidy slows down growth. In the first-best optimum collusion is socially optimal, but when the government cannot discriminate between innovation and imitation, it should promote product market competition.

Keywords: Innovation; Imitation; Endogenous growth; Technology policy (search for similar items in EconPapers)
JEL-codes: O38 O41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2005-06
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~ and nep-mic
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