![Investment, R&D, and Long-Run Growth, PDF eBook Investment, R&D, and Long-Run Growth, PDF eBook](http://speedyhen.dmmserver.com/media/640/97836425/9783642517181.jpg)
Investment, R&D, and Long-Run Growth PDF
by Dietmar Hornung
Part of the Lecture Notes in Economics and Mathematical Systems series
- Information
Description
In the 1990s, growth theory has incorporated imperfect competition in its investigations.
This innovation has proven to be seminal: Cleviating from growth models with perfect competition, the new framework featured forward- looking entrepreneurs.
Firms maximize profits intertemporarily, i. e. their in- vestment leads to instantaneous sunk costs and offers flows of future profits.
Firms finance this investment by launching shares. The capital market is per- fectly competitive, implying that the return on a share is equal to the return on a bond.
As opposed to the capital market, the goods market is imperfectly competitive.
As a result of investment, firms enjoy market power.
That is, firms may acquire the capability to provide a product that is differentiated in, e. g. , styling, technology, accessibility, or reputation.
The launch of a dif- ferentiated product allows to capture a market niche, and successful firms may price above marginal cost.
The resulting profit flows are channelled to the firms' shareholders.
The introduction of monopolistic competition into growth theory is valuable: real world economies may be portrayed rather by such an imperfect competition framework than by a perfect competition approach.
Starting with Romer (1990), in growth theory, modeling of imperfect competition has been notoriously bound to a focus on the impact of research and development (R&D) on economic growth.
In the existing literature, growth-affecting investment is restricted to R&D investment.
Information
-
Download Now
- Format:PDF
- Publisher:Springer Berlin Heidelberg
- Publication Date:29/06/2013
- Category:
- ISBN:9783642517181
Information
-
Download Now
- Format:PDF
- Publisher:Springer Berlin Heidelberg
- Publication Date:29/06/2013
- Category:
- ISBN:9783642517181