Catch-Up and Fall-Back Through Innovation and Imitation

33 Pages Posted: 19 May 2012 Last revised: 17 Oct 2012

See all articles by Jess Benhabib

Jess Benhabib

New York University - Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Jesse Perla

University of British Columbia (UBC)

Christopher Tonetti

New York University (NYU)

Date Written: May 2012

Abstract

Will fast growing emerging economies sustain rapid growth rates until they "catch-up" to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally "fallback" relative to the frontier? This paper models agents growing as a result of investments in innovation and imitation. Imitation facilitates technology diffusion, with the productivity of imitation modeled by a catch-up function that increases with distance to the frontier. The resulting equilibrium is an endogenous segmentation between innovators and imitators, where imitating agents optimally choose to "catch-up" or "fall-back" to a productivity ratio below the frontier.

Suggested Citation

Benhabib, Jess and Perla, Jesse and Tonetti, Christopher, Catch-Up and Fall-Back Through Innovation and Imitation (May 2012). NBER Working Paper No. w18091. Available at SSRN: https://ssrn.com/abstract=2062724

Jess Benhabib (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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Jesse Perla

University of British Columbia (UBC) ( email )

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Christopher Tonetti

New York University (NYU) ( email )

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United States

HOME PAGE: http://www.christophertonetti.com/

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