Working Paper Series,
Research Institute of Industrial Economics

Abstract: This paper presents a model to explain why both industry leaders and follower firms often invest in R&D and explores the welfare implications of these R&D investment choices. Regardless of initial conditions, the equilibrium path in this model involves gradually convergence to a balanced growth path and R&D subsidies have no effect on the balanced growth rate. Nevertheless, it is always optimal for the government to intervene by subsidizing the R&D expenditures of industry leaders and taxing the R&D expenditures of follower firms. Without government intervention, market forces generate too much creative destruction.

Keywords: Economic growth; R&D

JEL-codes: O32; O41

38 pages, December 12, 1999

Download statistics

Published as

Paul S. Segerstrom, (2007), 'Intel Economics', International Economic Review, vol 48, no 1, pages 247-280

• Research Institute of Industrial Economics
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:iuiwop:0524This page generated on 2024-09-13 22:15:48.