Competing Engines of Growth: Innovation and Standardization

Daron Acemoglu, Gino Gancia and Fabrizio Zilibotti

No 15958, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study a dynamic general equilibrium model where innovation takes the form of the introduction new goods, whose production requires skilled workers. Innovation is followed by a costly process of standardization, whereby these new goods are adapted to be produced using unskilled labor. Our framework highlights a number of novel results. First, standardization is both an engine of growth and a potential barrier to it. As a result, growth in an inverse U-shaped function of the standardization rate (and of competition). Second, we characterize the growth and welfare maximizing speed of standardization. We show how optimal IPR policies affecting the cost of standardization vary with the skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that the interplay between innovation and standardization may lead to multiple equilibria. Finally, we study the implications of our model for the skill-premium and we illustrate novel reasons for linking North-South trade to intellectual property rights protection.

JEL-codes: F43 O31 O33 O34 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-dev, nep-dge, nep-ino and nep-opm
Note: EFG ITI POL
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Citations: View citations in EconPapers (20)

Published as Acemoglu, Daron & Gancia, Gino & Zilibotti, Fabrizio, 2012. "Competing engines of growth: Innovation and standardization," Journal of Economic Theory, Elsevier, vol. 147(2), pages 570-601.e3.

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Related works:
Journal Article: Competing engines of growth: Innovation and standardization (2012)
Working Paper: Competing Engines of Growth: Innovation and Standardization (2010)
Working Paper: Competing engines of growth: Innovation and standardization (2010)
Working Paper: Competing engines of growth: innovation and standardization (2010)
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