Innovation by Heterogeneous Leaders
Tatsuro Iwaisako () and
No 15-30, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics
We develop a Schumpeterian growth model that differs from the quality-ladder model in the following two ways. First, the size of the quality increment is determined by a random draw from a given distribution, and consequently leader firms are different in terms of their quality lead over their followers, and thus have different profit flows. Second, we assume that the R&D technology of leader firms exhibits diminishing returns, and consequently some leader firms engage in R&D activities. The results show that leaders with larger quality leads over their followers make smaller R&D investments and tend to be replaced more rapidly; this result is consistent with the behaviors of some previous leader firms such as Sony and Eastman-Kodak. Moreover, we show that subsidizing followers f R&D can promote leaders f aggregate R&D. Subsidies for followers f R&D promote their R&D and impede individual leader firms f R&D. However, promotion of followers f R&D decreases the number of leaders with larger quality leads and smaller R&D investments and increases that of leaders with smaller quality leads and larger R&D investments. If this positive effect from a changed distribution outweighs the negative effects on individual firms f R&D, promotion of followers f R&D increases leaders f aggregate R&D.
Keywords: Schumpeterian growth; Heterogeneous leaders; R&D subsidies (search for similar items in EconPapers)
JEL-codes: L16 O31 O38 (search for similar items in EconPapers)
Pages: 21 pages
New Economics Papers: this item is included in nep-cna, nep-ino, nep-net and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Journal Article: Innovation by Heterogeneous Leaders (2019)
Working Paper: Innovation by Heterogeneous Leaders (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1530
Access Statistics for this paper
More papers in Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Yuka Sawazaki ().