Long Run Dynamics of Heterogeneous Product and Process Innovations for a Monopolist
34 Pages Posted: 26 Nov 2011 Last revised: 15 Feb 2012
Date Written: November 26, 2011
Abstract
This paper introduces the dynamical framework which combines product and process innovations. The model contributes to the theoretical literature on innovations in two ways. First, it permits for the simultaneous dynamics of both types of innovations which is rarely considered in the literature. Second, the products being generated by the innovations are heterogeneous in their investment characteristics. This allows for the formation of the dynamic interdependency between both types of innovations. As a result the steady state levels of process innovations for each product are different and influence the dynamics of product innovations in turn.
Keywords: Product Innovations, Process Innovations, Dynamics, Multiproduct, Heterogeneous
JEL Classification: C02, L0, O31
Suggested Citation: Suggested Citation