Equilibrium of Relations that subsist between the Activities of Consumption and the Activities of Innovation

Abstract

Suppose consumers value products solely because they purvey `characteristics', ζ, which composed with time are sources of utility. Necessarily, there exists a `consumption technology (CT)', and `innovation technology (IT)' serves for the satisfaction of CT. This study arrives at an equilibrium parameterization for each of CT, IT, and the hedonic prices that are outcome of the composition of CT with IT.

Keywords: Depth of Innovation, Breadth of Innovation, Frequency of Innovation, Hedonic Prices, Characteristics, Welfare

JEL Classification: O30, D11, D12