Technological Distance, Growth and Scale Effects

22 Pages Posted: 25 Feb 2003

See all articles by Pietro F. Peretto

Pietro F. Peretto

Duke University - Department of Economics; Duke Innovation & Entrepreneurship Initiative

Sjak Smulders

Tilburg University - Center and Faculty of Economics and Business Administration; University of Calgary - Department of Economics

Abstract

We present an endogenous growth model in which the scale effect may be positive or negative, but vanishes asymptotically. The mechanism behind this result provides a microfoundation for models that exploit the interaction of growth and market structure to remove the scale effect. When more firms are active, the economy is more specialised in that firms are less likely to work on related problems. This increase in technological distance reduces the spillovers between firms. A larger economy with more firms accumulates more knowledge. However, the spillovers that benefit a firm do not necessarily increase because of the differentiation of the knowledge stock.

Suggested Citation

Peretto, Pietro F. and Smulders, Jacobus (Sjak) A., Technological Distance, Growth and Scale Effects. The Economic Journal, Vol. 112, pp. 603-624, 2002. Available at SSRN: https://ssrn.com/abstract=320562

Pietro F. Peretto (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
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919-660-1807 (Phone)
919-684-8974 (Fax)

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Jacobus (Sjak) A. Smulders

Tilburg University - Center and Faculty of Economics and Business Administration ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2920 (Phone)
+31 13 466 3042 (Fax)

HOME PAGE: http://www.uvt.nl/webwijs/english/show.html?anr=801585&lang=en

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

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