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Process Innovations and Growth

Rivista Italiana degli Economisti, Vol. 3, December 2008

Posted: 19 Dec 2009

See all articles by Antonella Nocco

Antonella Nocco

Università del Salento (Lecce) Dipartimento di Scienze Economiche e Matematico-Statistiche

Date Written: December 1, 2008

Abstract

This work introduces firm heterogeneity in a dynamic model of growth with both process and product innovations. Deliberate R&D is undertaken to create new varieties of products that contribute to welfare through consumer's love of variety. Long-run growth is fuelled by process innovations that occur in response to i) increased supply capabilities (which increase with the number of varieties of patents at the technology frontier) and ii) demand incentives (through a larger market). The growing economy is described by a succession of moving equilibria and scale effects are mitigated through the reallocation of the workforce between the R&D and production sectors.

Keywords: Process Innovations, Product Innovation, Firm Heterogeneity, Technology Frontier, Moving Equilibrium, Scale Effect

JEL Classification: O30, O31, O41

Suggested Citation

Nocco, Antonella, Process Innovations and Growth (December 1, 2008). Rivista Italiana degli Economisti, Vol. 3, December 2008, Available at SSRN: https://ssrn.com/abstract=1525341

Antonella Nocco (Contact Author)

Università del Salento (Lecce) Dipartimento di Scienze Economiche e Matematico-Statistiche ( email )

Piazza Tancredi, n7
Lecce, 73100
Italy

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