Technology Lock-In with Horizontal and Vertical Innovations Through Limited R&D Spending

18 Pages Posted: 2 Aug 2014

See all articles by Anton A. Bondarev

Anton A. Bondarev

WWZ Universit├Ąt Basel

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics

Date Written: July 2014

Abstract

In this paper we analyze an inter-temporal optimization problem of a representative firm that invests in horizontal and vertical innovations and that faces a constraint with respect to total R&D spending. We find that there may exist two different steady-states of the economy when the amount of research spending falls short of an endogenously determined threshold: one with higher productivities and less new technologies being developed, and the other with more technologies being created and lower productivities. Thus, a lock-in effect may arise that, however, can be overcome by raising R&D spending sufficiently such that the steady-state becomes unique and the firm produces the whole spectrum of available technologies.

Keywords: Multiple steady-states, lock-in, innovations, R&D constraint, optimal control

JEL Classification: C61, D92, O32

Suggested Citation

Bondarev, Anton A. and Greiner, Alfred, Technology Lock-In with Horizontal and Vertical Innovations Through Limited R&D Spending (July 2014). Available at SSRN: https://ssrn.com/abstract=2474942 or http://dx.doi.org/10.2139/ssrn.2474942

Anton A. Bondarev (Contact Author)

WWZ Universit├Ąt Basel ( email )

Basel, 4051
Switzerland

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
Bielefeld, 33501
Germany
+49 521 106 4859 (Phone)
+49 521 106 67120 (Fax)

HOME PAGE: http://phoenix.wiwi.uni-bielefeld.de/lehrbereiche/vwl/wipol

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
37
Abstract Views
593
PlumX Metrics