Abstract
This paper develops an R&D based endogenous growth model in which the firm's free-riding behavior, prompted by an incomplete technological protection at the industry level, can drive economic growth. Unlike existing endogenous growth models, it shows how free-riding behavior and process spillovers can mutually promote dynamic competition at the industry level and how they constitute a major source of growth in the economy. In the dynamic general equilibrium model that we propose, the representative industry is a duopoly that consists of a leader who innovates and a laggard who freerides by exploiting the source of intraindustry spillover. The main results show that the innovation strategies of the two firms can be dynamically strategic complements if a large technology gap prevails and that a fall in the level of technological protection can enhance economic growth.
Original language | English |
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Pages (from-to) | 315-335 |
Number of pages | 21 |
Journal | Journal of Optimization Theory and Applications |
Volume | 139 |
Issue number | 2 |
DOIs | |
Publication status | Published - Nov 2008 |
Keywords
- Applied differential games
- Endogenous growth
- Imitation
- Innovation
- Spillovers
- Technology gap
ASJC Scopus subject areas
- Management Science and Operations Research
- Control and Optimization
- Applied Mathematics