Abstract
This chapter traces the idea that technological change is endogenous to microeconomic roots considerably earlier than those emphasized in the “new” macroeconomic theories of economic growth. Building upon contributions by Richard Nelson, Jacob Schmookler, F.M. Scherer, and Yoram Barzel, it presents a lean model of how incentives for technological innovation arise endogenously from the interplay of changes in knowledge and demand. Paradoxes attributable to monopoly, parallel but independent technical initiatives, uncertainty, and the divergence between social and private benefits are resolved. A simulation analysis explores the implications of skew stochastic payoff distributions for the optimal number of R&D approaches.
This article was written for, and is reprinted with permission from, Horst Hanusch and Andreas Pykas, eds., The Elgar Companion on Neo-Schumpeterian Economics (Cheltenham: Edward Elgar, 2005).
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Scherer Aetna, F. (2005). Schumpeter and the Micro-foundations of Endogenous Growth. In: Link, A.N., Scherer, F.M. (eds) Essays in Honor of Edwin Mansfield. Springer, Boston, MA. https://doi.org/10.1007/0-387-25022-0_3
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DOI: https://doi.org/10.1007/0-387-25022-0_3
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