Bounded Learning from Incumbent Firms

Erzo Luttmer

No 771, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: Social learning plays an important role in models of productivity dispersion and long-run growth. In economies with a continuum of producers and unbounded productivity distributions, social learning can sometimes leave long-run growth rates completely indeterminate. This paper modifies a model in which potential entrants attempt to imitate randomly selected incumbent firms by introducing an upper bound on how much entrants can learn from incumbents. When this upper bound is taken to infinity, a unique long-run growth rate emerges, even though the economy without upper bound has an unbounded continuum of balanced growth rates.

Keywords: Technology diffusion; Size distribution of firms; Endogenous growth (search for similar items in EconPapers)
JEL-codes: L11 O33 (search for similar items in EconPapers)
Pages: 32
Date: 2020-08-07
New Economics Papers: this item is included in nep-eff
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.minneapolisfed.org/research/wp/wp771.pdf (application/pdf)

Related works:
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:fip:fedmwp:88603

DOI: 10.21034/wp.771

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().