Innovation by entrants and incumbents
We extend the basic Schumpeterian endogenous growth model by allowing incumbents to undertake innovations to improve their products, while entrants engage in more “radical” innovations to replace incumbents. Our model provides a tractable framework for the analysis of growth driven by both entry of...
| Main Authors: | , |
|---|---|
| Other Authors: | |
| Format: | Article |
| Published: |
Elsevier
2018
|
| Online Access: | http://hdl.handle.net/1721.1/113626 https://orcid.org/0000-0003-0908-7491 |
| _version_ | 1826200450952593408 |
|---|---|
| author | Cao, Dan Acemoglu, K. Daron |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Cao, Dan Acemoglu, K. Daron |
| author_sort | Cao, Dan |
| collection | MIT |
| description | We extend the basic Schumpeterian endogenous growth model by allowing incumbents to undertake innovations to improve their products, while entrants engage in more “radical” innovations to replace incumbents. Our model provides a tractable framework for the analysis of growth driven by both entry of new firms and productivity improvements by continuing firms. The model generates a non-degenerate equilibrium firm size distribution driven by entry of new firms and expansion exit of existing firms. When there is also costly imitation preventing any sector from falling too far below the average, the stationary firm size distribution is Pareto with an exponent approximately equal to one (the so-called “Zipf distribution”). |
| first_indexed | 2024-09-23T11:36:40Z |
| format | Article |
| id | mit-1721.1/113626 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T11:36:40Z |
| publishDate | 2018 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | mit-1721.1/1136262022-10-01T04:47:01Z Innovation by entrants and incumbents Cao, Dan Acemoglu, K. Daron Massachusetts Institute of Technology. Department of Economics Acemoglu, K. Daron We extend the basic Schumpeterian endogenous growth model by allowing incumbents to undertake innovations to improve their products, while entrants engage in more “radical” innovations to replace incumbents. Our model provides a tractable framework for the analysis of growth driven by both entry of new firms and productivity improvements by continuing firms. The model generates a non-degenerate equilibrium firm size distribution driven by entry of new firms and expansion exit of existing firms. When there is also costly imitation preventing any sector from falling too far below the average, the stationary firm size distribution is Pareto with an exponent approximately equal to one (the so-called “Zipf distribution”). 2018-02-13T18:06:43Z 2018-02-13T18:06:43Z 2015-01 2014-03 2018-02-13T15:47:07Z Article http://purl.org/eprint/type/JournalItem 0022-0531 1095-7235 http://hdl.handle.net/1721.1/113626 Acemoglu, Daron, and Cao, Dan. “Innovation by Entrants and Incumbents.” Journal of Economic Theory 157 (May 2015): 255–294 © 2015 Elsevier Inc https://orcid.org/0000-0003-0908-7491 http://dx.doi.org/10.1016/J.JET.2015.01.001 Journal of Economic Theory Creative Commons Attribution-NonCommercial-NoDerivs License http://creativecommons.org/licenses/by-nc-nd/4.0/ application/pdf Elsevier Elsevier |
| spellingShingle | Cao, Dan Acemoglu, K. Daron Innovation by entrants and incumbents |
| title | Innovation by entrants and incumbents |
| title_full | Innovation by entrants and incumbents |
| title_fullStr | Innovation by entrants and incumbents |
| title_full_unstemmed | Innovation by entrants and incumbents |
| title_short | Innovation by entrants and incumbents |
| title_sort | innovation by entrants and incumbents |
| url | http://hdl.handle.net/1721.1/113626 https://orcid.org/0000-0003-0908-7491 |
| work_keys_str_mv | AT caodan innovationbyentrantsandincumbents AT acemoglukdaron innovationbyentrantsandincumbents |