Diversity and Technological Progress
This paper proposes a tractable model to study the equilibrium diversity of technological progress and shows that equilibrium technological progress may exhibit too little diversity (too much conformity), in particular foregoing socially beneficial investments in “alternative” technologies that will...
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| Format: | Working Paper |
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Cambridge, MA: Department of Economics, Massachusetts Institute of Technology
2012
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| Online Access: | http://hdl.handle.net/1721.1/71556 |
| _version_ | 1811068923043381248 |
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| author | Acemoglu, Daron |
| author_facet | Acemoglu, Daron |
| author_sort | Acemoglu, Daron |
| collection | MIT |
| description | This paper proposes a tractable model to study the equilibrium diversity of technological progress and shows that equilibrium technological progress may exhibit too little diversity (too much conformity), in particular foregoing socially beneficial investments in “alternative” technologies that will be used at some point in the future. The presence of future innovations that will replace current innovations imply that social benefits from innovation are not fully internalized. As a consequence, the market favors technologies that generate current gains relative to those that will bear fruit in the future; current innovations in research lines that will be profitable in the future are discouraged because current innovations are typically followed by further innovations before they can be profitably marketed. A social planner would choose a more diverse research portfolio and would induce a higher growth rate than the equilibrium allocation. The diversity of researchers is a partial (imperfect) remedy against the misallocation induced by the market. Researchers with different interests, competences or ideas may choose non-profit maximizing and thus more diverse research portfolios, indirectly contributing to economic growth. |
| first_indexed | 2024-09-23T08:02:56Z |
| format | Working Paper |
| id | mit-1721.1/71556 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T08:02:56Z |
| publishDate | 2012 |
| publisher | Cambridge, MA: Department of Economics, Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/715562019-04-09T16:17:22Z Diversity and Technological Progress Acemoglu, Daron economic growth diversity innovation research science technological change This paper proposes a tractable model to study the equilibrium diversity of technological progress and shows that equilibrium technological progress may exhibit too little diversity (too much conformity), in particular foregoing socially beneficial investments in “alternative” technologies that will be used at some point in the future. The presence of future innovations that will replace current innovations imply that social benefits from innovation are not fully internalized. As a consequence, the market favors technologies that generate current gains relative to those that will bear fruit in the future; current innovations in research lines that will be profitable in the future are discouraged because current innovations are typically followed by further innovations before they can be profitably marketed. A social planner would choose a more diverse research portfolio and would induce a higher growth rate than the equilibrium allocation. The diversity of researchers is a partial (imperfect) remedy against the misallocation induced by the market. Researchers with different interests, competences or ideas may choose non-profit maximizing and thus more diverse research portfolios, indirectly contributing to economic growth. 2012-07-08T23:46:49Z 2012-07-08T23:46:49Z 2011-12-15 Working Paper http://hdl.handle.net/1721.1/71556 Working paper, Massachusetts Institute of Techhnology, Dept. of Economics;11-06 An error occurred on the license name. An error occurred getting the license - uri. application/pdf Cambridge, MA: Department of Economics, Massachusetts Institute of Technology |
| spellingShingle | economic growth diversity innovation research science technological change Acemoglu, Daron Diversity and Technological Progress |
| title | Diversity and Technological Progress |
| title_full | Diversity and Technological Progress |
| title_fullStr | Diversity and Technological Progress |
| title_full_unstemmed | Diversity and Technological Progress |
| title_short | Diversity and Technological Progress |
| title_sort | diversity and technological progress |
| topic | economic growth diversity innovation research science technological change |
| url | http://hdl.handle.net/1721.1/71556 |
| work_keys_str_mv | AT acemogludaron diversityandtechnologicalprogress |