On the modeling of size distributions when technologies are complex

Jakub Growiec

No 195, NBP Working Papers from Narodowy Bank Polski

Abstract: The study considers a stochastic R&D process where the invented production technologies consist of a large number n of complementary components. The degree of complementarity is captured by the elasticity of substitution of the CES aggregator function. Drawing from the Central Limit Theorem and the Extreme Value Theory we find, under very general assumptions, that the cross-sectional distributions of technological productivity are well-approximated either by the lognormal, Weibull, or a novel “CES/Normal” distribution, depending on the underlying elasticity of substitution between technology components. We find the tail of the “CES/Normal” distribution to be fatter than the Weibull tail but thinner than the Pareto (power law) one. We numerically assess the rate of convergence of the true technological productivity distribution to the theoretical limit with n.

Keywords: technological productivity distribution; stochastic R&D; CES; Weibull distribution; lognormal distribution; limiting distribution (search for similar items in EconPapers)
JEL-codes: E23 L11 O47 (search for similar items in EconPapers)
Pages: 28
Date: 2015
New Economics Papers: this item is included in nep-eff and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://static.nbp.pl/publikacje/materialy-i-studia/195_en.pdf (application/pdf)

Related works:
Journal Article: On the modeling of size distributions when technologies are complex (2015)
Working Paper: On the modeling of size distributions when technologies are complex (2013)
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:nbp:nbpmis:195

Access Statistics for this paper

More papers in NBP Working Papers from Narodowy Bank Polski Contact information at EDIRC.
Bibliographic data for series maintained by Jakub Growiec ().