Investment, R&D, and Long-Run Growth (Lecture Notes in Economics and Mathematical Systems, 509)

Hornung, Dietmar

ISBN 10: 3540425284 / ISBN 13: 9783540425281

Published by Springer, Frankfurt/Main Germany., 2001

About this Item

Softcover 2001,1st edition. Text and covers in fine condition. Binding firm. Pages unmarked and clean. (194 pages).

Seller Inventory # 021804

Bibliographic Details

• Title: Investment, R&D, and Long-Run Growth (Lecture Notes in Economics and Mathematical Systems, 509)
• Publisher: Springer, Frankfurt/Main Germany.
• Publication Date: 2001
• Language: English
• ISBN 10: 3540425284
• ISBN 13: 9783540425281
• Binding: Soft cover
• Edition: 1st Edition
• Condition: Fine
• Seller catalogs:
  • Economics

About this title

Synopsis

In the 1990s, growth theory has incorporated imperfect competition in its investigations. This innovation has proven to be seminal: Cleviating from growth models with perfect competition, the new framework featured forward­ looking entrepreneurs. Firms maximize profits intertemporarily, i. e. their in­ vestment leads to instantaneous sunk costs and offers flows of future profits. Firms finance this investment by launching shares. The capital market is per­ fectly competitive, implying that the return on a share is equal to the return on a bond. As opposed to the capital market, the goods market is imperfectly competitive. As a result of investment, firms enjoy market power. That is, firms may acquire the capability to provide a product that is differentiated in, e. g. , styling, technology, accessibility, or reputation. The launch of a dif­ ferentiated product allows to capture a market niche, and successful firms may price above marginal cost. The resulting profit flows are channelled to the firms' shareholders. The introduction of monopolistic competition into growth theory is valuable: real world economies may be portrayed rather by such an imperfect competition framework than by a perfect competition approach. Starting with Romer (1990), in growth theory, modeling of imperfect competition has been notoriously bound to a focus on the impact of research and development (R&D) on economic growth. In the existing literature, growth-affecting investment is restricted to R&D investment.