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| Publications of Pietro F. Peretto :chronological alphabetical combined listing:
%% Papers Submitted
@article{fds15968,
Author = {P. Peretto},
Title = {Effluent Taxes, Market Structure and the Rate and Direction
of Endogenous Technological Change},
Year = {2006},
Key = {fds15968}
}
@article{fds53015,
Author = {P. Peretto},
Title = {A Schumpeterian Analysis of Deficit-Financed Dividend Tax
Cuts},
Year = {2006},
Key = {fds53015}
}
@article{fds53013,
Author = {P. Peretto},
Title = {Energy Taxes and Endogenous Technological
Change},
Year = {2006},
Key = {fds53013}
}
@article{fds53016,
Author = {P. Peretto},
Title = {The Employment (and Output) of Nations: Theory and Policy
Implications},
Year = {2006},
Key = {fds53016}
}
@article{fds53017,
Author = {P. Peretto (with Michelle Connolly)},
Title = {The Manhattan Metaphor},
Year = {2005},
Key = {fds53017}
}
@article{fds15969,
Author = {P. Peretto},
Title = {Market Power, Unemployment and Growth},
Year = {2003},
Key = {fds15969}
}
@article{fds15971,
Author = {P. Peretto (with N. Cetorelli)},
Title = {Oligopoly Banking and Capital Accumulation},
Year = {2003},
Key = {fds15971}
}
%% Journal Articles
@article{fds372694,
Author = {Chu, AC and Peretto, P and Xu, R},
Title = {Export-led takeoff in a Schumpeterian economy},
Journal = {Journal of International Economics},
Volume = {145},
Year = {2023},
Month = {November},
url = {http://dx.doi.org/10.1016/j.jinteco.2023.103798},
Abstract = {This study develops an open-economy Schumpeterian growth
model with endogenous takeoff to explore the effects of
exports on the transition of an economy from stagnation to
innovation-driven growth. We find that a higher export
demand raises the level of employment, which causes a larger
market size and an earlier takeoff along with a higher
transitional growth rate but has no effect on long-run
economic growth. These theoretical results are consistent
with empirical evidence that we document using cross-country
panel data in which the positive effect of exports on
economic growth becomes smaller, as countries become more
developed, and eventually disappears. We also calibrate the
model to data in China and find that its export share
increasing from 4.6% in 1978 to 36% in 2006 causes a rapid
growth acceleration, but the fall in exports after 2007
causes a growth deceleration that continues until recent
times.},
Doi = {10.1016/j.jinteco.2023.103798},
Key = {fds372694}
}
@article{fds373655,
Author = {Chu, AC and Peretto, PF},
Title = {Innovation and inequality from stagnation to
growth},
Journal = {European Economic Review},
Volume = {160},
Year = {2023},
Month = {November},
url = {http://dx.doi.org/10.1016/j.euroecorev.2023.104615},
Abstract = {This study explores the evolution of income inequality in an
economy featuring an endogenous transition from stagnation
to growth. We incorporate heterogeneous households in a
Schumpeterian model of endogenous takeoff. In the
pre-industrial era, the economy is in stagnation, and income
inequality is determined by the unequal distribution of
land. When the takeoff occurs, the economy experiences
innovation and economic growth, and income inequality
gradually rises until the economy reaches the steady state.
We calibrate the model for a quantitative analysis and
compare the simulation results to historical data in the UK.
Extending the analysis to allow for endogenous labor supply,
we find that endogenous labor supply introduces a channel
through which inequality contributes to shaping the
transition path of the economy and that households sort
themselves into a leisure class that supplies zero labor and
the rest of society that supplies labor.},
Doi = {10.1016/j.euroecorev.2023.104615},
Key = {fds373655}
}
@article{fds364041,
Author = {Chu, AC and Peretto, PF and Wang, X},
Title = {Agricultural revolution and industrialization},
Journal = {Journal of Development Economics},
Volume = {158},
Year = {2022},
Month = {September},
url = {http://dx.doi.org/10.1016/j.jdeveco.2022.102887},
Abstract = {This study explores how agricultural technology affects the
endogenous takeoff of an economy in the Schumpeterian growth
model. Due to the subsistence requirement for agricultural
consumption, an improvement in agricultural technology
reallocates labor from agriculture to the industrial sector.
Therefore, agricultural improvement expands firm size in the
industrial sector, which determines innovation and triggers
an endogenous transition from stagnation to growth.
Calibrating the model to data, we find that without the
reallocation of labor from agriculture to the industrial
sector in the early 19th century, the takeoff of the US
economy would have been delayed by about four
decades.},
Doi = {10.1016/j.jdeveco.2022.102887},
Key = {fds364041}
}
@article{fds355814,
Author = {Iacopetta, M and Peretto, PF},
Title = {Corporate governance and industrialization},
Journal = {European Economic Review},
Volume = {135},
Year = {2021},
Month = {June},
url = {http://dx.doi.org/10.1016/j.euroecorev.2021.103718},
Abstract = {Corporate governance distortions delay or even halt a
country's transformation into a modern innovation economy.
We investigate the mechanism through a growth model that
allows for agency issues within firms. Governance
distortions raise the cost of investment and depress the
incentives to set up new firms. Modest differences in
governance account for large gaps in income: A 32 percent
investment cost differential can explain the secular decline
of Latin America income relative to that of the USA, and
implies an industrialization delay of a third of a century.
We obtain similar results for a large number of countries
and macro-regions.},
Doi = {10.1016/j.euroecorev.2021.103718},
Key = {fds355814}
}
@article{fds355815,
Author = {Chu, AC and Furukawa, Y and Mallick, S and Peretto, P and Wang,
X},
Title = {Dynamic effects of patent policy on innovation and
inequality in a Schumpeterian economy},
Journal = {Economic Theory},
Volume = {71},
Number = {4},
Pages = {1429-1465},
Year = {2021},
Month = {June},
url = {http://dx.doi.org/10.1007/s00199-021-01357-6},
Abstract = {This study explores the dynamic effects of patent policy on
innovation and income inequality in a Schumpeterian growth
model with endogenous market structure and heterogeneous
households. We find that strengthening patent protection has
a positive effect on economic growth and a positive or an
inverted-U effect on income inequality when the number of
differentiated products is fixed in the short run. However,
when the number of products adjusts endogenously, the
effects of patent protection on growth and inequality become
negative in the long run. We also calibrate the model to US
data to perform a quantitative analysis and find that the
long-run negative effect of patent policy on inequality is
much larger than its short-run positive effect. This result
remains consistent with our empirical finding from a panel
vector autoregression.},
Doi = {10.1007/s00199-021-01357-6},
Key = {fds355815}
}
@article{fds348836,
Author = {Brunnschweiler, CN and Peretto, PF and Valente,
S},
Title = {Wealth creation, wealth dilution and demography},
Journal = {Journal of Monetary Economics},
Volume = {117},
Pages = {441-459},
Year = {2021},
Month = {January},
url = {http://dx.doi.org/10.1016/j.jmoneco.2020.02.002},
Abstract = {Demographic forces are crucial drivers of macroeconomic
performance. Yet, existing theories do not allow demography
to respond to fundamentals and policies while determining
key macroeconomic variables. We build a model of endogenous
interactions between fertility and innovation-led
productivity growth that delivers empirically consistent
co-movements of population, income and wealth. Wealth
dilution and wage dynamics stabilize population through
non-Malthusian forces; demography determines the ratios of
labor income and consumption to financial wealth. Shocks
that reduce population size, like immigration barriers,
reduce permanently the labor share and the mass of firms,
creating prolonged stagnation and substantial
intergenerational redistribution of income and
welfare.},
Doi = {10.1016/j.jmoneco.2020.02.002},
Key = {fds348836}
}
@article{fds366250,
Author = {Peretto, PF},
Title = {Through scarcity to prosperity: Toward a theory of
sustainable growth},
Journal = {Journal of Monetary Economics},
Volume = {117},
Pages = {243-257},
Year = {2021},
Month = {January},
url = {http://dx.doi.org/10.1016/j.jmoneco.2020.01.004},
Abstract = {To make progress toward a comprehensive theory of
sustainable growth, this paper integrates fertility choice
and exhaustible resource dynamics in a tractable model of
endogenous technological change. The model identifies
conditions under which the interdependence of population,
resources and technology produces a transition that consists
of three phases: (1) an initial phase where agents exploit
exhaustible natural resources to support population growth;
(2) an intermediate phase where agents turn on the
Schumpeterian engine of endogenous innovation in response to
population-led market expansion; (3) a terminal phase where
knowledge accumulation becomes the sole engine of growth.
The last phase is crucial: not only economic growth no
longer requires growth of physical inputs, but technological
change also compensates for the exhaustion of the natural
resource.},
Doi = {10.1016/j.jmoneco.2020.01.004},
Key = {fds366250}
}
@article{fds353241,
Author = {Ferraro, D and Ghazi, S and Peretto, PF},
Title = {Implications of tax policy for innovation and aggregate
productivity growth},
Journal = {European Economic Review},
Volume = {130},
Year = {2020},
Month = {November},
url = {http://dx.doi.org/10.1016/j.euroecorev.2020.103590},
Abstract = {We examine the quantitative implications of income taxation
for innovation and aggregate productivity growth within the
context of a dynamic stochastic general equilibrium model of
innovation-led growth. In the model, innovation comes from
entrants creating new products and incumbents improving own
existing products. The model embodies key features of the
U.S. government sector: (i) an individual income tax with
differential treatment of labor income, dividends, and
capital gains; (ii) a corporate tax; (iii) a consumption
tax; (iv) government purchases. The model is restricted to
fit observations for the post-war U.S. economy. Our results
suggest that endogenous movements in aggregate productivity
and endogenous market structure play a quantitatively
important role in the propagation of tax
shocks.},
Doi = {10.1016/j.euroecorev.2020.103590},
Key = {fds353241}
}
@article{fds325930,
Author = {Coffey, B and McLaughlin, PA and Peretto, P},
Title = {The cumulative cost of regulations},
Journal = {Review of Economic Dynamics},
Volume = {38},
Number = {2016},
Pages = {1-21},
Year = {2020},
Month = {October},
url = {http://dx.doi.org/10.1016/j.red.2020.03.004},
Abstract = {We estimate the effects of federal regulation on the value
added to GDP for a panel of 22 industries in the United
States over a period of 35 years (1977–2012). The
structure of our linear specification is explicitly derived
from the closed-form solutions of a multisector
Schumpeterian model of endogenous growth. We allow
regulation to enter the specification in a fairly flexible
manner. Our estimates of the model's parameters are then
identified from covariation in some standard sector-specific
data joined with RegData 2.2, which measures the incidence
of regulations on industries based on a text analysis of
federal regulatory code. With the model's parameters fitted
to real data, we confidently conduct counterfactual
experiments on alternative regulatory environments. Our
results show that regulatory restrictions have had a net
effect of dampening economic growth by approximately 0.8
percent per annum since 1980. Had regulation been held
constant at levels observed in 1980, our model predicts that
the economy would have been nearly 25 percent larger by 2012
(i.e., regulatory growth since 1980 cost GDP $4 trillion in
2012, or about $13,000 per capita).},
Doi = {10.1016/j.red.2020.03.004},
Key = {fds325930}
}
@article{fds347330,
Author = {Ferraro, D and Peretto, PF},
Title = {Innovation-led growth in a time of debt},
Journal = {European Economic Review},
Volume = {121},
Year = {2020},
Month = {January},
url = {http://dx.doi.org/10.1016/j.euroecorev.2019.103350},
Abstract = {We study the effects of large reductions in government
budget deficits (labeled “fiscal consolidations”) on
firms’ entry, innovative investments, productivity and per
capita output growth in a model of endogenous technological
change. Due to the absence of lump-sum taxes, temporary
budget deficits set government debt-output ratios on
unsustainable paths. An equilibrium then requires the
specification of a date at which the debt-output ratio is
stabilized at a constant finite value. We discipline
parameters using post-war observations for the U.S. economy.
We find that fiscal consolidations produce persistent growth
slowdowns, permanently lowering the path of per capita
output relative to a benchmark economy in which the fiscal
consolidation is achieved with lump-sum taxes. These output
losses are sizable. In this sense, government debt is a
burden on the economy. Tax-based consolidations produce
output losses that are twice as large as those from
spending-based consolidations.},
Doi = {10.1016/j.euroecorev.2019.103350},
Key = {fds347330}
}
@article{fds346851,
Author = {Kane, RF and Peretto, PF},
Title = {More apples vs. better apples: Distribution and
innovation-driven growth},
Journal = {Journal of Economic Theory},
Volume = {185},
Year = {2020},
Month = {January},
url = {http://dx.doi.org/10.1016/j.jet.2019.104964},
Abstract = {We model distribution, the delivery of goods to customers,
as an activity governed by its own technology and undertaken
by firms subsequently to production. We then use the model
to investigate how distribution shapes innovation-driven
economic growth. We contrast two canonical specifications of
distribution costs, iceberg vs. per-unit. The per-unit cost
implies that factory-specific productivity improvements
cannot sustain steady-state growth. Quality improvement,
instead, raises the services that customers obtain from each
unit of the good so that firms can increase the volume of
services without increasing the volume of shipments. Unless
technological advancements allow the distribution cost to
fall to zero, quantity growth must cease and growth must be
driven by quality improvement. More generally, the ratio of
distribution to manufacturing unit costs must be constant in
steady state. The iceberg cost delivers this property by
assumption. The per-unit distribution cost, instead, yields
an endogenous structure of the costs of serving the
market.},
Doi = {10.1016/j.jet.2019.104964},
Key = {fds346851}
}
@article{fds325931,
Author = {Ferraro, D and Peretto, PF},
Title = {Commodity Prices and Growth},
Journal = {Economic Journal},
Volume = {128},
Number = {616},
Pages = {3242-3265},
Publisher = {Oxford University Press (OUP)},
Year = {2018},
Month = {December},
url = {http://dx.doi.org/10.1111/ecoj.12559},
Abstract = {In this article, we propose an endogenous growth model of
commodity-rich economies in which: (i) long-run
(steady-state) growth is endogenous and yet independent of
commodity prices; (ii) commodity prices affect short-run
growth through transitional dynamics; and (iii) the status
of net commodity importer/exporter is endogenous. We argue
that these predictions are consistent with historical
evidence from the 19th to the 21st century.},
Doi = {10.1111/ecoj.12559},
Key = {fds325931}
}
@article{fds335433,
Author = {Peretto, PF},
Title = {Robust endogenous growth},
Journal = {European Economic Review},
Volume = {108},
Pages = {49-77},
Publisher = {Elsevier BV},
Year = {2018},
Month = {September},
url = {http://dx.doi.org/10.1016/j.euroecorev.2018.06.007},
Abstract = {This paper studies a generalization of the Schumpeterian
models with endogenous market structure that allows the
overall production structure to be more than linear in the
growth-driving factor and yet generates endogenous growth,
defined as steady-state, constant, exponential growth of
income per capita. This version of modern growth theory,
therefore, is robust in the sense that its key result
obtains for a thick set of parameter values instead of, as
often claimed, for a set of measure zero. The paper,
moreover, pays close attention to transitional dynamics,
showing not only the existence but also the global stability
of the endogenous-growth steady state.},
Doi = {10.1016/j.euroecorev.2018.06.007},
Key = {fds335433}
}
@article{fds285736,
Author = {Peretto, PF},
Title = {From Smith to Schumpeter: A Theory of Take-Off and
Convergence to Sustained Growth},
Journal = {European Economic Review},
Volume = {78},
Pages = {1-26},
Publisher = {Elsevier BV},
Year = {2015},
Month = {August},
ISSN = {0014-2921},
url = {http://dx.doi.org/10.1016/j.euroecorev.2015.05.001},
Doi = {10.1016/j.euroecorev.2015.05.001},
Key = {fds285736}
}
@article{fds320611,
Author = {Suphaphiphat, N and Peretto, PF and Valente, S},
Title = {Endogenous Growth and Property Rights over Renewable
Resources},
Volume = {76},
Number = {C},
Pages = {125-151},
Year = {2015},
Abstract = {We study how different regimes of access rights to renewable
natural resources – namely open access versus full
property rights – affect sustainability, growth and
welfare in the context of modern endogenous growth theory.
Resource exhaustion may occur under both regimes but is more
likely to arise under open access. Moreover, under full
property rights, positive resource rents increase
expenditures on manufacturing goods and temporarily
accelerate productivity growth, but also yield a higher
resource price at least in the short-to-medium run. We
characterize analytically and quantitatively the model׳s
dynamics to assess the welfare implications of differences
in property rights enforcement.},
Key = {fds320611}
}
@article{fds320612,
Author = {Iacopetta, M and Minetti, R and Peretto, PF},
Title = {Financial Markets, Industry Dynamics, and
Growth},
Journal = {Economic Research Initiatives at Duke (ERID)},
Number = {172},
Pages = {55 pages},
Year = {2014},
Month = {August},
Abstract = {We study the impact of corporate governance frictions in an
economy where growth is driven both by the foundation of new
firms and by the in-house investment of incumbent firms.
Firms' managers engage in tunneling and empire building
activities. Active shareholders monitor managers, but can
shirk on their monitoring, to the detriment of minority
(passive) shareholders. The analysis reveals that these
conflicts among firms' stakeholders inhibit the entry of new
firms, thereby increasing market concentration. Despite
depressing investment returns in the short run, the
frictions can however lead incumbents to invest more
aggressively in the long run to exploit the concentrated
market structure. By means of quantitative analysis, we
characterize conditions under which corporate governance
reforms boost or reduce welfare.},
Key = {fds320612}
}
@article{fds285738,
Author = {Peretto, P},
Title = {Comments on the paper: "Production process heterogeneity,
time to build, and macroeconomic performance" by M.
Amendola, J. L. Gaffard and F. Saraceno},
Journal = {Revue de l'OFCE},
Volume = {124},
Number = {5},
Pages = {59a-59a},
Publisher = {CAIRN},
Year = {2012},
Month = {November},
ISSN = {1265-9576},
url = {http://dx.doi.org/10.3917/reof.124.0513},
Doi = {10.3917/reof.124.0513},
Key = {fds285738}
}
@article{fds285747,
Author = {Cetorelli, N and Peretto, PF},
Title = {Credit quantity and credit quality: Bank competition and
capital accumulation},
Journal = {Journal of Economic Theory},
Volume = {147},
Number = {3},
Pages = {967-998},
Publisher = {Elsevier BV},
Year = {2012},
Month = {May},
ISSN = {0022-0531},
url = {http://dx.doi.org/10.1016/j.jet.2012.01.006},
Abstract = {In this paper we show that bank competition has an
intrinsically ambiguous impact on capital accumulation. We
further show that it is also responsible for the emergence
of development traps in economies that otherwise would be
characterized by unique equilibria. These results explain
the conflicting evidence emerging from the recent empirical
studies of the effects of bank competition on economic
growth. We obtain them developing a dynamic, general
equilibrium model of capital accumulation where banks
operate in a Cournot oligopoly. More banks lead to a higher
quantity of credit available to entrepreneurs, but also to
diminished incentives to offer relationship services that
improve the likelihood of success of investment projects. We
also show that conditioning on one key parameter resolves
the theoretical ambiguity: in economies where intrinsic
market uncertainty is high (low), less (more) competition
leads to higher capital accumulation. © 2012 Elsevier
Inc.},
Doi = {10.1016/j.jet.2012.01.006},
Key = {fds285747}
}
@article{fds285746,
Author = {Peretto, PF},
Title = {Resource abundance, growth and welfare: A Schumpeterian
perspective},
Journal = {Journal of Development Economics},
Volume = {97},
Number = {1},
Pages = {142-155},
Publisher = {Elsevier BV},
Year = {2012},
Month = {January},
ISSN = {0304-3878},
url = {http://dx.doi.org/10.1016/j.jdeveco.2010.12.001},
Abstract = {This paper takes a new look at the long-run implications of
resource abundance. It develops a Schumpeterian model of
endogenous growth that incorporates an upstream
resource-intensive sector and yields an analytical solution
for the transition path. It then derives conditions under
which, as the economy's endowment of a natural resource
rises, (i) growth accelerates and welfare rises, (ii) growth
decelerates but welfare rises nevertheless, and (iii) growth
decelerates and welfare falls. Which of these scenarios
prevails depends on the response of the natural resource
price to an increase in the resource endowment. The price
response determines the change in income earned by the
owners of the resource (the households) and thereby the
change in their expenditure on manufacturing goods. Since
manufacturing is the economy's innovative sector, this
income-to-expenditure effect links resource abundance to the
size of the market for manufacturing goods and drives how
re-source abundance affects incentives to undertake
innovative activity. © 2010 Elsevier B.V.},
Doi = {10.1016/j.jdeveco.2010.12.001},
Key = {fds285746}
}
@article{fds285744,
Author = {Peretto, PF},
Title = {The Growth and Welfare Effects of Deficit-Financed Dividend
Tax Cuts},
Journal = {Journal of Money, Credit and Banking},
Volume = {43},
Number = {5},
Pages = {835-869},
Publisher = {WILEY},
Year = {2011},
Month = {August},
ISSN = {0022-2879},
url = {http://dx.doi.org/10.1111/j.1538-4616.2011.00399.x},
Abstract = {I develop a tractable growth model that allows me to study
analytically transition dynamics and welfare in response to
a deficit-financed cut of the tax rate on distributed
dividends. I then carry out a quantitative assessment of the
Job Growth and Taxpayer Relief Reconciliation Act (JGTRRA)
of 2003. I find that the Act produceslowersteady-state
growth despite the fact that the economy's saving and
employment ratiosrise. Most importantly, it produces a
welfarelossof 19.34% of annual consumption per capita-a
substantial effect driven by the fact that the steady-state
growth rate falls from 2% to 1.08%. © 2011 The Ohio State
University.},
Doi = {10.1111/j.1538-4616.2011.00399.x},
Key = {fds285744}
}
@article{fds320613,
Author = {Peretto, PF and Valente, S},
Title = {Growth on a Finite Planet: Resources, Technology and
Population in the Long Run},
Number = {11},
Year = {2011},
Month = {June},
Abstract = {We study the interactions between technological change,
resource scarcity and population dynamics in a Schumpeterian
model with endogenous fertility. There exists a
pseudo-Malthusian equilibrium in which population is
constant and income grows exponentially: the equilibrium
population level is determined by resource scarcity but is
independent of technology. The stability properties are
driven by (i) the income reaction to increased resource
scarcity and (ii) the fertility response to income dynamics.
If labor and resources are substitutes in production, income
and fertility dynamics are self-balancing and the
pseudo-Malthusian equilibrium is the global attractor of the
system. If labor and resources are complements, income and
fertility dynamics are self-reinforcing and drive the
economy towards either demographic explosion or human
extinction. Introducing a minimum resource requirement, we
obtain a second steady state implying constant population
even under complementarity. The standard result of
exponential population growth appears as a rather special
case of our model.},
Key = {fds320613}
}
@article{fds285745,
Author = {Peretto, PF and Valente, S},
Title = {Resources, innovation and growth in the global
economy},
Journal = {Journal of Monetary Economics},
Volume = {58},
Number = {4},
Pages = {387-399},
Publisher = {Elsevier BV},
Year = {2011},
Month = {May},
ISSN = {0304-3932},
url = {http://dx.doi.org/10.1016/j.jmoneco.2011.07.001},
Abstract = {The relative performance of open economies is analyzed in an
endogenous growth model with asymmetric trade. A
resource-rich country trades resource-based intermediates
for final goods produced by a resource-poor economy. The
effects of an increase in the resource endowment depend on
the elasticity of substitution between resources and labor
in intermediates' production. Under substitution
(complementarity), the resource boom generates higher
(lower) income, lower (higher) employment in the primary
sector and faster (slower) growth in the resource-rich
economy. In the resource-poor economy, the shock induces a
higher (lower) relative wage and positive (negative) growth
effects that are exclusively due to trade. © 2011 Elsevier
B.V.},
Doi = {10.1016/j.jmoneco.2011.07.001},
Key = {fds285745}
}
@article{fds285741,
Author = {Peretto, PF},
Title = {Market power, growth, and unemployment},
Pages = {493-525},
Year = {2011},
Month = {January},
ISBN = {9781780523965},
url = {http://dx.doi.org/10.1108/S1574-8715(2011)0000011024},
Abstract = {I present a model where firms and workers set wages above
the marketclearing level. Unemployment is thus generated by
their exercise of market power. Because both the labor and
product markets are imperfectly competitive, market power in
the labor market interacts with market power in the product
market. This interaction sheds new light on the effects of
policy interventions on unemployment and growth. For
example, labor market reforms that reduce labor costs reduce
unemployment and boost growth because they expand the scale
of the economy and generate more competition in the product
market. © 2011 by Emerald Group Publishing Limited. All
rights reserved.},
Doi = {10.1108/S1574-8715(2011)0000011024},
Key = {fds285741}
}
@article{fds285749,
Author = {Sá, N and Connolly, M and Peretto, P},
Title = {Sustaining the goose that lays the golden egg: A continuous
treatment of technological transfer},
Journal = {Scottish Journal of Political Economy},
Volume = {56},
Number = {4},
Pages = {492-507},
Publisher = {WILEY},
Year = {2009},
Month = {November},
ISSN = {0036-9292},
url = {http://dx.doi.org/10.1111/j.1467-9485.2009.00495.x},
Abstract = {This paper proposes a simple model of the trade-offs
perceived by innovating firms when investing in countries
with limited intellectual property rights (IPR). The model
allows for a continuous treatment of technology transfer and
production cost gains occurring through FDI. While it does
not consider possible changes in rates of innovation caused
by changes in IPR in developing countries, it allows one to
uncover a potentially non-monotonic relationship between
welfare and IPR in the recipient country. © 2009 The
Authors. Journal compilation © 2009 Scottish Economic
Society.},
Doi = {10.1111/j.1467-9485.2009.00495.x},
Key = {fds285749}
}
@article{fds285743,
Author = {Peretto, PF},
Title = {Energy taxes and endogenous technological
change},
Journal = {Journal of Environmental Economics and Management},
Volume = {57},
Number = {3},
Pages = {269-283},
Publisher = {Elsevier BV},
Year = {2009},
Month = {May},
ISSN = {0095-0696},
url = {http://dx.doi.org/10.1016/j.jeem.2008.07.007},
Abstract = {This paper studies the effects of a tax on energy use in a
growth model where market structure is endogenous and
jointly determined with the rate of technological change.
Because this economy does not exhibit the scale effect (a
positive relation between TFP growth and aggregate R&D), the
tax has no effect on the steady-state growth rate. It has,
however, important transitional effects that give rise to
surprising results. Specifically, under the plausible
assumption that energy demand is inelastic, there may exist
a hump-shaped relation between the energy tax and welfare.
This shape stems from the fact that the reallocation of
resources from energy production to manufacturing triggers a
temporary acceleration of TFP growth that generates a
√-shaped time profile of consumption. If endogenous
technological change raises consumption sufficiently fast
and by a sufficient amount in the long run, and households
are sufficiently patient, the tax raises welfare despite the
fact that-in line with standard intuition-it lowers
consumption in the short run. © 2008 Elsevier Inc. All
rights reserved.},
Doi = {10.1016/j.jeem.2008.07.007},
Key = {fds285743}
}
@article{fds285742,
Author = {Peretto, PF},
Title = {Effluent taxes, market structure, and the rate and direction
of endogenous technological change},
Journal = {Environmental and Resource Economics},
Volume = {39},
Number = {2},
Pages = {113-138},
Publisher = {Springer Nature},
Year = {2008},
Month = {February},
ISSN = {0924-6460},
url = {http://dx.doi.org/10.1007/s10640-007-9101-z},
Abstract = {This paper studies the effects of effluent taxes on firms'
allocation of resources to cost-reducing and
emission-reducing R&D, and on entrepreneurs' decisions to
develop new goods and enter the market. A tax set at an
exogenous rate that does not depend on the state of
technology reduces growth, the level of consumption of each
good, and raises the number of firms. The induced increase
in the variety of goods is a benefit not considered in
previous analyses. In terms of environmental benefits, the
tax induces a positive rate of pollution abatement that
offsets the "dirty" side of economic growth. A tax set at an
endogenous rate that holds constant the tax burden per unit
of output, in contrast, has ambiguous effects on growth, the
scale of activity of each firm and the number of firms.
Besides being novel, the potential positive growth effect of
this type of effluent tax is precisely what makes this
instrument effective for welfare-maximizing purposes. The
socially optimal policy, in fact, requires the tax burden
per unit of output to equal the marginal rate of
substitution between the growth rate of consumption and
abatement. Moreover, a tax/subsidy on entry is needed,
depending on whether the contribution of product variety to
pollution dominates consumers' love of variety. © 2007
Springer Science+Business Media, Inc.},
Doi = {10.1007/s10640-007-9101-z},
Key = {fds285742}
}
@article{fds285748,
Author = {Peretto, PF and Connolly, M},
Title = {The Manhattan metaphor},
Journal = {Journal of Economic Growth},
Volume = {12},
Number = {4},
Pages = {329-350},
Publisher = {Springer Nature},
Year = {2007},
Month = {December},
ISSN = {1381-4338},
url = {http://dx.doi.org/10.1007/s10887-007-9023-1},
Abstract = {Fixed operating costs draw a sharp distinction between
endogenous growth based on horizontal and vertical
innovation: a larger number of product lines puts pressure
on an economy's resources; greater productivity of existing
product lines does not. Consequently, the only plausible
engine of endogenous growth is vertical innovation whereby
progress along the quality or cost ladder does not require
the replication of fixed costs. Is, then, product variety
expansion irrelevant? No. The two dimensions of technology
are complementary in that using one and the other produces a
more comprehensive theory of economic growth. The vertical
dimension allows endogenous growth unconstrained by
endowments, the horizontal provides the mechanism that
translates changes in aggregate variables into changes in
product-level variables, which ultimately drive incentives
to push the technological frontier in the vertical
dimension. We show that the potential for exponential growth
due to an externality that makes entry costs fall linearly
with the number of products, combined with the limited
carrying capacity of the system due to fixed operating
costs, yields logistic dynamics for the number of products.
This desirable property allows us to provide a closed-form
solution for the model's transition path and thereby derive
analytically the welfare effects of changes in parameters
and policy variables. Our Manhattan Metaphor illustrates
conceptually why we obtain this mathematical representation
when we simply add fixed operating costs to the standard
modeling of variety expansion. © Springer Science+Business
Media, LLC 2007.},
Doi = {10.1007/s10887-007-9023-1},
Key = {fds285748}
}
@article{fds285751,
Author = {Peretto, PF},
Title = {Schumpeterian growth with productive public spending and
distortionary taxation},
Journal = {Review of Development Economics},
Volume = {11},
Number = {4},
Pages = {699-722},
Publisher = {WILEY},
Year = {2007},
Month = {November},
ISSN = {1363-6669},
url = {http://dx.doi.org/10.1111/j.1467-9361.2007.00425.x},
Abstract = {Schumpeterian growth theory eliminates the scale effect by
positing a process of development of new product lines that
fragments the aggregate market in submarkets whose size does
not increase with population or the size of the workforce.
This entails the sterilization of the growth effects of
selected fiscal variables. This insight is applied to shed
new light on the role of distortionary taxes on consumption,
household labor and assets income, corporate income, and of
productive public spending. The framework allows the
identification of which of these fiscal variables have
permanent (steady-state) growth effects, and which ones have
only transitory effects. It also allows the transitional
dynamics to be solved analytically and thus the analysis of
the welfare effects of revenue-neutral changes in tax
structure. It is found that replacing taxes that distort
labor supply with taxes that distort saving/investment
choices raises welfare, and the intuition behind this
surprising result is discussed. © 2007 The Author; Journal
compilation © 2007 Blackwell Publishing
Ltd.},
Doi = {10.1111/j.1467-9361.2007.00425.x},
Key = {fds285751}
}
@article{fds285764,
Author = {Peretto, PF},
Title = {Corporate taxes, growth and welfare in a Schumpeterian
economy},
Journal = {Journal of Economic Theory},
Volume = {137},
Number = {1},
Pages = {353-382},
Publisher = {Elsevier BV},
Year = {2007},
Month = {November},
ISSN = {0022-0531},
url = {http://hdl.handle.net/10161/1939 Duke open
access},
Abstract = {I take a new look at the long-run implications of taxation
through the lens of modern Schumpeterian growth theory. I
focus on the latest vintage of models that sterilize the
scale effect through a process of product proliferation that
fragments the aggregate market into submarkets whose size
does not increase with the size of the workforce. I show
that the following interventions raise welfare: (a) granting
full expensibility of R&D to incorporated firms; (b)
eliminating the corporate income tax and/or the capital
gains tax; (c) reducing taxes on labor and/or consumption.
What makes these results remarkable is that in all three
cases the endogenous increase in the tax on dividends
necessary to balance the budget has a positive effect on
growth. A general implication of my analysis is that
corporate taxation plays a special role in Schumpeterian
economies and provides novel insights on how to design
welfare-enhancing tax reforms. © 2007 Elsevier Inc. All
rights reserved.},
Doi = {10.1016/j.jet.2006.11.005},
Key = {fds285764}
}
@article{fds285750,
Author = {Laincz, CA and Peretto, PF},
Title = {Scale effects in endogenous growth theory: An error of
aggregation not specification},
Journal = {Journal of Economic Growth},
Volume = {11},
Number = {3},
Pages = {263-288},
Publisher = {Springer Nature},
Year = {2006},
Month = {September},
ISSN = {1381-4338},
url = {http://dx.doi.org/10.1007/s10887-006-9004-9},
Abstract = {Modern Schumpeterian growth theory focuses on the product
line as the main locus of innovation and exploits endogenous
product proliferation to sterilize the scale effect. The
empirical core of this theory consists of two claims: (i)
growth depends on average employment (i.e., employment per
product line); (ii) average employment is scale invariant.
We show that data on employment, RandD personnel, and the
number of establishments in the US for the period 1964-2001
provide strong support for these claims. While employment
and the total number of R&D workers increase with no
apparent matching change in the long-run trend of
productivity growth, employment and RandD employment per
establishment exhibit no long-run trend. We also document
that the number of establishments, employment and population
exhibit a positive trend, while the ratio
employment/establishment does not. Finally, we provide
results of time series tests consistent with the predictions
of these models. © Springer Science+Business Media, LLC
2006.},
Doi = {10.1007/s10887-006-9004-9},
Key = {fds285750}
}
@article{fds285765,
Author = {Peretto, PF},
Title = {Fiscal policy and long-run growth in R&D-based models
with endogenous market structure},
Journal = {Journal of Economic Growth},
Volume = {8},
Number = {3},
Pages = {325-347},
Year = {2003},
Month = {September},
url = {http://dx.doi.org/10.1023/A:1026288415768},
Abstract = {This paper shows that in a model of endogenous growth that
does not exhibit the scale effect, taxes on consumption and
labor income and the level and composition of public
expenditure have no effect on steady-state growth. The only
fiscal instruments that affect steady-state growth are taxes
on asset and corporate income. In line with standard
intuition, tax rates and public expenditure have level
effects on income per capita. These results emphasize that
although growth is endogenous, in the sense that it is
determined by the model and it is subject to policy action,
instruments that work by changing market size do not affect
it. Effective growth-enhancing policies operate through the
interest rate. © 2003 Kluwer Academic Publishers.},
Doi = {10.1023/A:1026288415768},
Key = {fds285765}
}
@article{fds285757,
Author = {Connolly, M and Peretto, PF},
Title = {Industry and the family: Two engines of growth},
Journal = {Journal of Economic Growth},
Volume = {8},
Number = {1},
Pages = {115-148},
Year = {2003},
Month = {March},
url = {http://dx.doi.org/10.1023/A:1022864901652},
Abstract = {We generalize the class of endogenous growth models in which
the scale of the economy has level rather than growth
effects, and study the implications of different demographic
and technological factors when both fertility choice and
research effort are endogenous. The model incorporates two
dimensions of technological progress: vertical (quality of
goods) and horizontal (variety of goods). Both dimensions
contribute to productivity growth but are driven by
different processes and hence respond differently to changes
in fundamentals. Specifically, while unbounded vertical
progress is feasible, the scale of the economy limits the
variety of goods. Incorporating a linearity in reproduction
generates steady-state population growth and variety
expansion. We thus have two engines of growth generating
dynamics that we compare with observed changes in
demographics, market structure, and patterns of growth.
Numerical solutions yield the important insight that, while
endogenous, fertility responds very little to industrial
policies. Demographic shocks, in contrast, have substantial
effects on growth. © 2003 Kluwer Academic
Publishers.},
Doi = {10.1023/A:1022864901652},
Key = {fds285757}
}
@article{fds285756,
Author = {Peretto, PF},
Title = {Endogenous market structure and the growth and welfare
effects of economic integration},
Journal = {Journal of International Economics},
Volume = {60},
Number = {1},
Pages = {177-201},
Publisher = {Elsevier BV},
Year = {2003},
Month = {January},
url = {http://dx.doi.org/10.1016/S0022-1996(02)00025-9},
Abstract = {This paper studies the growth and welfare effects of
integration in a world economy populated by global
oligopolists. In economies that move from autarky to trade,
growth and welfare rise because exit of domestic firms is
more than compensated by entry of foreign firms so that
integration generates a larger, more competitive market
where firms have access to a larger body of technological
spillovers that support faster growth. The effects of a
gradual reduction of tariffs are different because economies
start out from a situation where all firms already serve all
markets. In this case, the global number of firms falls so
that the variety of consumption goods and the diversity of
innovation paths fall. The surviving firms, on the other
hand, are larger and exploit static and dynamic economies of
scale to a larger degree. These homogenization and
rationalization effects work in opposite directions. Under
plausible conditions, the rationalization effect dominates
and growth and welfare rise. © 2002 Elsevier Science B.V.
All rights reserved.},
Doi = {10.1016/S0022-1996(02)00025-9},
Key = {fds285756}
}
@article{fds285755,
Author = {Peretto, P and Smulders, S},
Title = {Technological distance, growth and scale
effects},
Journal = {Economic Journal},
Volume = {112},
Number = {481},
Pages = {603-624},
Publisher = {Oxford University Press (OUP)},
Year = {2002},
Month = {January},
url = {http://dx.doi.org/10.1111/1468-0297.00732},
Abstract = {We present an endogenous growth model in which the scale
effect may be positive or negative but vanishes
asymptotically. The mechanism behind this result provides a
microfoundation for models that exploit the interaction of
growth and market structure to remove the scale effect. When
more firms are active, the economy is more specialised in
that firms are less likely to work on related problems. This
increase in technological distance reduces the spillovers
between firms. A larger economy with more firms accumulates
more knowledge. However, the spillovers that benefit a firm
do not necessarily increase because of the differentiation
of the knowledge stock.},
Doi = {10.1111/1468-0297.00732},
Key = {fds285755}
}
@article{fds285754,
Author = {Peretto, PF},
Title = {Firm size, rivalry and the extent of the market in
endogenous technological change},
Journal = {European Economic Review},
Volume = {43},
Number = {9},
Pages = {1747-1773},
Publisher = {Elsevier BV},
Year = {1999},
Month = {October},
url = {http://dx.doi.org/10.1016/S0014-2921(98)00038-5},
Abstract = {Evidence shows that firms build their market position by
accumulating knowledge protected by secrecy, patents and
other appropriation devices. I explore the implications of
this fact in a model economy where oligopolistic firms
establish in-house R and D programs. In symmetric
equilibrium, the number of firms determines concentration
and firm size. These determine the scale and the efficiency
of R and D operations and the rate of innovation. The number
of firms, moreover, is endogenous and determined jointly
with the rate of growth by the zero-profit condition. This
property yields new results. For example, the scale effect
of population size may be negative. The market allocation of
resources is not Pareto optimal. I discuss the nature of
this distortion.},
Doi = {10.1016/S0014-2921(98)00038-5},
Key = {fds285754}
}
@article{fds285753,
Author = {Peretto, PF},
Title = {Industrial development, technological change, and long-run
growth},
Journal = {Journal of Development Economics},
Volume = {59},
Number = {2},
Pages = {389-417},
Publisher = {Elsevier BV},
Year = {1999},
Month = {August},
url = {http://dx.doi.org/10.1016/S0304-3878(99)00018-8},
Abstract = {To account for the qualitative differences between developed
and developing countries, this paper argues that the
expensive in-house R and D that manufacturing firms
undertake in advanced industrial economies cannot be
supported in countries that are in the early stage of
industrialization and do not have sufficiently large markets
for manufacturing goods. Such economies grow as standard
development models predict: by accumulating physical and
human capital and increasing specialization by industry.
Only at sufficiently high levels of development there are
incentives for systematic R and D efforts. As a result,
economies go through an industrial life cycle as they move
from initial backwardness to industrial maturity. In other
words, development and growth are stages of a process of
structural transformation characterized by changing patterns
of capital accumulation, specialization by industry, and
technological change.},
Doi = {10.1016/S0304-3878(99)00018-8},
Key = {fds285753}
}
@article{fds285752,
Author = {Peretto, PF},
Title = {Cost reduction, entry, and the interdependence of market
structure and economic growth},
Journal = {Journal of Monetary Economics},
Volume = {43},
Number = {1},
Pages = {173-195},
Publisher = {Elsevier BV},
Year = {1999},
Month = {February},
url = {http://dx.doi.org/10.1016/S0304-3932(98)00040-3},
Abstract = {I study the joint determination of market structure and
growth in an oligopolistic economy. Firms run in-house R&D
programs to produce over time a continuous flow of
cost-reducing innovations. In symmetric equilibrium, the
relation between market structure and growth has two
aspects. First, a larger number of firms induces
fragmentation of the market and dispersion of R&D resources.
This prevents exploitation of scale economies internal to
the firm and slows down growth. Second, the number of firms
changes with market and technology conditions and is
endogenous. In particular, R&D spending is a fixed cost and
there is a negative feed-back of the rate of growth on the
number of firms. The explicit consideration of the
interdependence of market structure and growth identifies a
fundamental trade-off between growth and variety that
produces interesting results. For example, the scale effect
is bounded from above and converges to zero when the number
of firms is large. Moreover, the market grows too little and
supplies too much variety. The inefficiency is not due to
technological externalities but to oligopolistic pricing and
the interaction between R&D and entry decisions.},
Doi = {10.1016/S0304-3932(98)00040-3},
Key = {fds285752}
}
@article{fds285758,
Author = {Peretto, PF},
Title = {Technological change and population growth},
Journal = {Journal of Economic Growth},
Volume = {3},
Number = {4},
Pages = {283-311},
Year = {1998},
Month = {January},
ISSN = {1381-4338},
url = {http://dx.doi.org/10.1023/A:1009799405456},
Abstract = {What is the relationship between the rate of population
growth and the rate of technological change? To answer this
question, I discuss a model where increasing returns
generate long-run growth but where the scale effect is
absent. More precisely, the model predicts that steady-state
productivity growth does not depend on population size
because an increase in population size leads to entry. The
resulting crowding-in effect generates dispersion of R&D
resources across firms and offsets the positive effect of
the scale of the economy on the returns to R&D. Changes in
population size have only transitory effects on productivity
growth. This desirable property allows me to introduce
population growth in the model and study the effects of
demographic shocks. The predicted patterns of growth, entry,
and change in industrial structure match the experience of
several industrialized countries. In addition, they match
several of the empirical observations cited as evidence
against standard models of endogenous technological change.
© 1998 Kluwer Academic Publishers.},
Doi = {10.1023/A:1009799405456},
Key = {fds285758}
}
@article{fds285763,
Author = {Peretto, PF},
Title = {Technological change, market rivalry, and the evolution of
the capitalist engine of growth},
Journal = {Journal of Economic Growth},
Volume = {3},
Number = {1},
Pages = {53-80},
Year = {1998},
Month = {January},
ISSN = {1381-4338},
url = {http://dx.doi.org/10.1023/A:1009722031825},
Abstract = {In the early stages of Western industrialization, innovation
was the domain of individuals who devoted their
entrepreneurial talents to the development of a new product
or process, typically setting up a new firm in order to take
the innovation to the market. Today, commercial R&D is
almost exclusively carried out by corporate laboratories
affiliated with manufacturing firms. The corporate R&D lab,
however, did not exist in its modern form until the late
nineteenth century. The history of Western
industrialization, thus, suggests that a fundamental change
in the structure of incentives, and consequently in the
nature and the organization of the R&D process, occurred
around the turn of the century. Three questions arise. What
is the nature of this change? What economic forces caused
it? What are its implications? To answer these questions, I
construct a model where this change is endogenous to the
evolution of the economy toward industrial maturity. The
change in the locus of innovation - from R&D undertaken by
intventor-entrepreneurs, to R&D undertaken within
established firms in close proximity to the production line
- results from the interaction of market structure and
technological change. This interaction captures the essence
of the evolution of the capitalist engine of growth and
provides an economic explanation of a "stylized fact" that
has received no attention in the theoretical literature. The
endogenous market structure generates dynamic feedbacks that
shape the growth path of the economy and determine the
structural change it undergoes, including the endogenous
formation of corporate R&D labs. The evolution of market
rivalry explains when and how established firms become the
major locus of R&D activity. © 1998 Kluwer Academic
Publishers.},
Doi = {10.1023/A:1009722031825},
Key = {fds285763}
}
@article{fds285762,
Author = {Malerba, F and Orsenigo, L and Peretto, P},
Title = {Persistence of innovative activities, sectoral patterns of
innovation and international technological
specialization},
Journal = {International Journal of Industrial Organization},
Volume = {15},
Number = {6},
Pages = {801-826},
Publisher = {Elsevier BV},
Year = {1997},
Month = {January},
url = {http://dx.doi.org/10.1016/s0167-7187(97)00012-x},
Abstract = {In this paper, we focus on the role of persistence and
heterogeneity of innovative activities at the level of the
firm in determining the patterns of technological change in
different industries and countries. We ask: are persistence
and heterogeneity associated with higher degrees of
concentration in innovative activities, stability in the
ranking of innovators, and lower degrees of entry and exit
in the population of innovators? Or, do the patterns of
innovation depend on other variables like firm size and
industrial concentration? Moreover, what are the
relationships between the patterns of innovative activities,
their determinants, and the technological specialization of
countries? We compute indicators of persistence and
heterogeneity using the OTAF-SPRU patent database at the
firm level for five European countries over the period
1969-1986 for 33 technological classes. Then, we estimate
the relationships between our indicators of the sectoral
patterns of innovative activities and international
technological specialization on the one hand, and our
indicators of persistence, heterogeneity and market
structure on the other. Results show that persistence and
asymmetries are important (and strongly related) phenomena
that affect the patterns of innovative activities across
countries and sectors, while the role of market structure
variables is less clear. Finally, international
technological specialization is associated to a competitive
core of persistent innovators. © 1997 Elsevier Science
B.V.},
Doi = {10.1016/s0167-7187(97)00012-x},
Key = {fds285762}
}
@article{fds285761,
Author = {Peretto, PF},
Title = {Sunk costs, market structure, and growth},
Journal = {International Economic Review},
Volume = {37},
Number = {4},
Pages = {895-923},
Publisher = {JSTOR},
Year = {1996},
Month = {January},
url = {http://dx.doi.org/10.2307/2527316},
Abstract = {I present a model of endogenous innovation where firms
undertake in-house research and development (R&D). The
concentration of sales and R&D resources determines the
scale and efficiency of R&D operations and rate of
productivity growth. In zero-profit equilibrium, R&D
expenditure is one component of total fixed costs and
determines the number of active firms. This feedback
generates interdependent pricing, investment, and entry/exit
decisions. The (jointly determined) rate of growth and
number of firms supported in general equilibrium define the
economy's balanced growth path. Multiple equilibria exist,
and firms' expectations about rivalry determine the
economy's performance.},
Doi = {10.2307/2527316},
Key = {fds285761}
}
@article{fds285760,
Author = {Peretto, P and Malerba, F and Heimler, A},
Title = {Sources, Appropriability and Directions of Technological
Change: USA and Italy},
Journal = {Banca Nazionale del Lavoro Quarterly Review},
Year = {1993},
Month = {June},
Key = {fds285760}
}
@article{fds285759,
Author = {Peretto, P},
Title = {Technoloy, Learning Opportunity and Internaitonal
Competitiveness: Some Empirical Evidence with Panel
Data},
Journal = {Giornale degli Economisti},
Year = {1990},
Month = {May},
Key = {fds285759}
}
%% Chapters in Books
@misc{fds325932,
Author = {Peretto, PF},
Title = {Market Power, Unemployment, and Growth},
Pages = {493-525},
Booktitle = {Frontiers of Economic Growth and Development},
Publisher = {Emerald Group Publishing Limited},
Editor = {de La Grandville and O and Choi, EK},
Year = {2012},
ISBN = {978-1-78052-396-5},
url = {http://dx.doi.org/10.1108/S1574-8715(2011)0000011024},
Abstract = {I present a model where firms and workers set wages above
the market-clearing level. Unemployment is thus generated by
their exercise of market power. Because both the labor and
product markets are imperfectly competitive, market power in
the labor market interacts with market power in the product
market. This interaction sheds new light on the effects of
policy interventions on unemployment and growth. For
example, labor market reforms that reduce labor costs reduce
unemployment and boost growth because they expand the scale
of the economy and generate more competition in the product
market.},
Doi = {10.1108/S1574-8715(2011)0000011024},
Key = {fds325932}
}
@misc{fds325933,
Author = {Peretto, PF},
Title = {Variety, Spillovers and Market Structure in a Model of
Endogenous Technological Change},
Pages = {338-366},
Booktitle = {Increasing Returns and Economic Analysis},
Publisher = {Macmillan Press Ltd},
Editor = {Arrow, KJ and Ng, YK and Yang, X},
Year = {1998},
ISBN = {978-1-349-26257-1},
url = {http://dx.doi.org/10.1007/978-1-349-26255-7_21},
Abstract = {Growth theorists have produced a number of interesting
models investigating the idea that technological progress,
the engine of growth in income per capita, is endogenous to
the economic system and driven by market forces. These
models are radically different from the traditional theory
of economic growth based on capital accumulation and
emphasize the incentives for profit-seeking agents to
undertake R&D aimed at developing new products and
processes, or incrementally improving old ones. In
particular, infinitely lived and perfectly enforceable
patents generate local monopolies by assigning to the
innovator the exclusive right to manufacture and sell the
new good.1 The emphasis on the non-rivalry of knowledge and
the patent law makes clear that imperfect markets and
monopoly power are necessary for profit-seeking agents to
undertake R&D and innovation. However, these models focus
exclusively on monopolistic competition to describe market
structure and firms’ behaviour. In addition, the emphasis
on the patent market and free entry in R&D neglects the fact
that most innovations are carried out by established
producers. As a consequence, these models neglect the
central role of the oligopolistic corporation and its
in-house integration of manufacturing and R&D. Thus, the
theory does not address those components of the market
structure, like concentration, firm size and market rivalry,
emphasized by Schumpeter (1942) as key determinants of the
R&D activity of profit-seeking firms.},
Doi = {10.1007/978-1-349-26255-7_21},
Key = {fds325933}
}
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