Growth Through Heterogeneous Innovations
80 Pages Posted: 8 Nov 2010 Last revised: 6 Jun 2024
There are 7 versions of this paper
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Date Written: November 2010
Abstract
We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.
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