Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/150301 
Year of Publication: 
2016
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 11 [Issue:] 3 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2016 [Pages:] 1053-1102
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
We develop a tractable dynamic model of productivity growth and technology spillovers that is consistent with the emergence of real world empirical productivity distributions. Firms can improve productivity by engaging in in-house R\&D, or alternatively, by trying to imitate other firms' technologies, subject to the limits of their absorptive capacities. The outcome of both strategies is stochastic. The choice between in-house R\&D and imitation is endogenous, and based on firms' profit maximization motive. Firms closer to the technological frontier face fewer imitation opportunities, and choose in-house R\&D, while firms farther from the frontier try to imitate more productive technologies. The equilibrium choice leads to a balanced-growth equilibrium featuring persistent productivity differences even when starting from ex-ante identical firms. The long-run productivity distribution can be described as a traveling wave with tails following a Pareto as can be observed in the empirical data.
Subjects: 
Imitation
innovation
growth
quality ladder
absorptive capacity
productivity differences
spillovers
JEL: 
O40
E10
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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