Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159181
Authors: 
Bellettini, Giorgio
Ottaviano, Gianmarco
Year of Publication: 
1999
Series/Report no.: 
Quaderni - Working Paper DSE 340
Abstract: 
We model 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 different generations and short-lived policy makers as a dynamic common agency problem, where competing generations invest a certain amount of resources to lobby either for the maintainance 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 technological parameters.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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