Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93445
Authors: 
Gray, Elie
Grimaud, André
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4678
Abstract: 
What is the social value of innovations in Schumpeterian growth models? This issue is tackled by introducing the concept of Lindahl equilibrium in a standard endogenous growth model with vertical innovations which is extended by explicitly considering knowledge diffusion on a Salop (1979) circle. Completing markets by pricing knowledge allows us to compare the private value of innovations with the social one. This comparison sheds a new light on the consequences of non-rivalry of knowledge and of market incompleteness on innovators' behavior. Then, we notably revisit the issues of Pareto sub-optimality and of R&D incentives in presence of cumulative innovations.
Subjects: 
Schumpeterian growth theory
Lindahl equilibrium
social value of innovations
Pareto sub-optimality
cumulative innovations
knowledge spillovers
JEL: 
D52
O31
O33
O40
O41
Document Type: 
Working Paper

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