Growth and ideas in a perfectly competitive world

Vincent Boitier ()
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Vincent Boitier: GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université

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Abstract: Are ideas, increasing returns to scale, and perfect competition compatible? To address this fundamental question, I build a purposefully simple model of growth and ideas with two salient features: (i) firms raise capital from shareholders, and (ii) the production function shows decreasing returns to scale in the stock of ideas and in labor. I obtain two noticeable results from this model. First, contrary to conventional wisdom, I show that ideas, increasing returns to scale, and a competitive equilibrium are tenable. Second, I underline that the model has a balanced growth equilibrium similar to the one founded in the semi-endogenous models.

Keywords: Growth theory; Ideas; Increasing return to scale; Competitive equilibrium (search for similar items in EconPapers)
Date: 2019-06
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Published in Structural Change and Economic Dynamics, 2019, 53, pp.370-376. ⟨10.1016/j.strueco.2019.06.002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02447215

DOI: 10.1016/j.strueco.2019.06.002

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