Path dependence and induced innovation

Karsten Wasiluk ()

No 2015-22, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: This paper presents an endogenous growth model that captures the origins of path dependence and technological lock-in and introduces a mechanism of induced innovation, which can trigger new research. Imperfect spillovers of secondary development can make the development of new technologies unattractive until research ceases in the long run. Changes in the relative supply of primary factors act as a stimulus for research as new technologies are better suited for the new environment. A simulation using changes of crude oil prices in the US shows the quantitative significance of the model's implications. The model is able to explain long waves of economic development where growth cycles are triggered by changes in the relative factor supply. It also provides a new rationale for governmental regulations such as Pigouvian taxes and pollution permits as they can stimulate innovation and provide the base for the development of "green" technologies.

Keywords: Path Dependence; Induced Innovation; Directed Technological Change; Growth Cycles (search for similar items in EconPapers)
JEL-codes: O30 O31 O33 O44 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-04-21
New Economics Papers: this item is included in nep-ene, nep-gro, nep-his, nep-ind, nep-ino and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:knz:dpteco:1522

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