Working Paper: CEPR ID: DP3274
Authors: Michele Boldrin; David Levine
Abstract: We construct a competitive model of innovation and growth under constant returns to scale. Previous models of growth under constant returns cannot model technological innovation. Current models of endogenous innovation rely on the interplay between increasing returns and monopolistic markets. In fact, established wisdom claims monopoly power to be instrumental for innovation and sees the non-rivalrous nature of ideas as a natural conduit to increasing returns. The results here challenge the positive description of previous models and the normative conclusion that monopoly through copyright and patent is socially beneficial.
Keywords: endogenous technological change; innovation; monopoly power
JEL Codes: D62; L16; O11; O31; O33; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Competition (L13) | Innovation (O35) |
| Monopoly Power (D42) | Innovation (O35) |
| Sunk Costs (D24) | Competition (L13) |
| Competition (L13) | Introduction of New Goods (D40) |
| Monopoly Power (D42) | Future Innovations (O39) |