Faculty of Economics and Business Administration Publications Database

Endogenous Innovation and Imitation in a Model of Equilibrium Growth

Volume: 11
Number: 4
Pages: 709 - 723
Month: April
ISSN-Print: 0176-2680
Link External Source: Online Version
Year: 1995
Keywords: Innovation; Imitation; Growth
Abstract: This paper provides a growthmodel in which innovation as well as imitation occurs. Economic growth is due to product innovations. Innovators driven by the possibility to appropriate monopoly profits do not remain in their monopolistic position forever. Latecoming imitators get into possession of the private knowledge of production through investments in R & D. Imitated products are marketed in oligopolistic markets. Imitation proves to be profitable despite a single factor market and positive imitation costs. A steady-state equilibrium with positive imitation and innovation rates as well as different market structures can be derived. Finally, the effects of industrial policy measures are discussed.