dp09-25[1].pdf (273.07 kB)
Download file

Leadership cycles

Download (273.07 kB)
report
posted on 03.03.2010, 15:29 by Piercarlo Zanchettin, Vincenzo Denicolò
We study a quality-ladder model of endogenous growth that produces stochastic leadership cycles. Over a cycle, industry leaders can innovate several successive times in the same industry, gradually increasing the magnitude of their technological lead before being replaced by a new entrant. Initially, new leaders are eager to enlarge their lead and do much of the research, but if they innovate repeatedly, their propensity to invest in R&D decreases. Eventually they stop doing research altogether, and as they are overtaken a new cycle starts. The model generates a skewed firm size distribution and a deviation from Gibrat’s law that accord with the empirical evidence. We also consider various policy measures, showing that in some cases policy should favour R&D by incumbents, not outsiders, and that stronger patent protection may reduce innovation and growth.

History

Publisher

Dept. of Economics, University of Leicester

Available date

03/03/2010

Publisher version

http://www.le.ac.uk/economics/research/discussion/papers2009.html

Book series

Papers in Economics;09/25

Language

en

Usage metrics

Categories

Keywords

Exports