Abstract
This chapter presents a neo-Schumpeterian OLG model of self-propelled growth of intermediate-product innovations and over time rising GDP rates. A one-period patent system generates monopoly rents for producers of recently innovated intermediate goods which serve together with competitively produced intermediates as inputs in final-good production. The rising variety of intermediates reduces the unit cost and the price of the final good which enables the financing of an ever-increasing rate of intermediate-product innovations by the savings of younger households. Growth in the OLG model of this chapter is attributed to a continuous innovation process driven by rational choices of short-lived agents.
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Notes
- 1.
In Chap. 11 this result is explicitly derived.
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Farmer, K., Schelnast, M. (2013). Endogenous Technological Progress and Infinite Economic Growth. In: Growth and International Trade. Springer Texts in Business and Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-33669-0_6
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DOI: https://doi.org/10.1007/978-3-642-33669-0_6
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