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Innovation by Heterogeneous Leaders

Tatsuro Iwaisako () and Kazuyoshi Ohki

No 15-30-Rev., Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We develop a Schumpeterian growth model in which both leaders and followers conduct R&D activities and in which leaders have different quality leads over their followers, determined by a random draw, and thus have different profit flows. We show that leaders with larger quality leads make smaller R&D investments; this result is consistent with the actual 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, because promotion of followers f R&D decreases (increases) the number of leaders with larger (smaller) quality leads and smaller (larger) R&D investments.

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)
Date: 2015-11, Revised 2018-04
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http://www2.econ.osaka-u.ac.jp/library/global/dp/1530R.pdf (application/pdf)

Related works:
Working Paper: Innovation by Heterogeneous Leaders (2015)
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