A Dynamic Model of the Choice of Technology in Economic Development

Haiwen Zhou and Ruhai Zhou

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as fixed costs of production, increasing returns in the manufacturing sector exist. In the unique steady state, first, when individuals become more patient, the saving rate increases while the level of income of an individual decreases. Second, an increase in population or percentage of income spent on the manufactured good does not change steady-state technology while decreases the level of income of an individual. Third, an increase in the wage rate leads a manufacturing firm to choose a more advanced technology and the steady-state capital stock increases. Finally, an increase in the level of subsidy to technology adoption does not change steady-state technology.

Keywords: choice of technology; overlapping-generations model; unemployment; economic development; increasing returns (search for similar items in EconPapers)
JEL-codes: D43 O10 (search for similar items in EconPapers)
Date: 2017-09-13
New Economics Papers: this item is included in nep-gro
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Published in Frontiers of Economics in China 3.11(2016): pp. 498-518

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Journal Article: A Dynamic Model of the Choice of Technology in Economic Development (2016)
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