Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/118070
Authors: 
Bellettini, Giorgio
Ottaviano, Gianmarco I.P.
Year of Publication: 
2003
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 59.2003
Abstract: 
We study an OLG economy where productivity growth comes from two alternative sources: process innovation and learning-by-doing. There is a trade-off between the two in so far as frequent technological updates reduce the scope for learning on existing technologies. A conflict is shown to arise between the young and the old, because the former favor innovation while the latter prefer learning. We model the interaction between overlapping generations and policy makers as a dynamic common agency problem, where competing generations invest a certain amount of resources to lobby either for the maintenance of the current technology or the adoption of a new one. By focusing on truthful Markov perfect equilibria, we characterize the political equilibrium and show its dependence on the underlying demographic, technological and preference parameters.
Subjects: 
Technological change
Technology option
Pressure goups
Dynamic common agency
JEL: 
C72
C73
D72
O38
O41
Document Type: 
Working Paper

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