Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25680
Authors: 
Keilbach, Max
Sanders, Mark
Year of Publication: 
2007
Series/Report no.: 
Jena economic research papers 2007,108
Abstract: 
We formulate a model that explicitly separates two functions in the innovation process: The introduction of new goods and the quality improvement of existing goods. While the latter is performed by the corporate R&D sector, the first is performed by entrepreneurs. We show that in a three sector economy, which also includes a producing sector, there exists a stable non trivial allocation of labor to production, innovation and entrepreneurship. We compute the steady state allocation of labor to production, R&D and Entrepreneurship. We show that the innovation rate decreases if one of the innovative sectors does not exist.
Subjects: 
Innovation
Variety Expansion
Quality Ladders
Entrepreneurship
R&D Sector
JEL: 
O31
O41
Document Type: 
Working Paper

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