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Title:Innovating firms and aggregate innovation PDF Logo
Authors:Klette, Tor Jakob
Kortum, Samuel
Issue Date:2002
Series/Report no.:Memorandum, Department of Economics, University of Oslo 2002,02
Abstract:We develop a parsimonious model of innovating firms rich enough to confront firm-level evidence. It captures the dynamic behavior of individual heterogeneous firms, describes the evolution of an industry with simultaneous entry and exit, and delivers a general equilibrium model of technological change. While unifying the theoretical analysis of firms, industries, and the aggregate economy, the models yields insight into empirical work on innovating firms. It accounts for the persistence over time of firms’ R & D investments, the concentration of R & D among incumbents firms, and the link between R & D and patenting . Furthermore, it explains why R & D as a fraction of revenues is strongly related to firm productivity yet largely unrelated to firm size or growth.
Subjects:R&D
firm growth
productivity
market structure
endogeneous growth theory
birth and death processes
JEL:L11
O31
Document Type:Working Paper
Appears in Collections:Memorandum, Department of Economics, University of Oslo

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