Header

UZH-Logo

Maintenance Infos

Competing engines of growth: Innovation and standardization


Acemoglu, Daron; Gancia, Gino; Zilibotti, Fabrizio (2012). Competing engines of growth: Innovation and standardization. Journal of Economic Theory, 147(2):570-601.

Abstract

We study a dynamic general equilibrium model where innovation takes the form of the introduction of new goods whose production requires skilled workers. Innovation is followed by a costly process of standardization, whereby these new goods are adapted to be produced using unskilled labor. Our framework highlights a number of novel results. First, standardization is both an engine of growth and a potential barrier to it. As a result, growth is an inverse U-shaped function ofthe standardization rate (and of competition). Second, we characterize the growth and welfare maximizing speed of standardization. We show how optimal protection of intellectual property rights affecting the cost of standardization vary with the skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that, depending on how competition between innovating and standardizing firms is modelled and on parameter values, a new type of multiplicity of equilibria may arise. Finally, we study the implications of our model forthe skill-premium and we illustrate novel reasons for linking North-South trade to intellectual property rights protection.

Abstract

We study a dynamic general equilibrium model where innovation takes the form of the introduction of new goods whose production requires skilled workers. Innovation is followed by a costly process of standardization, whereby these new goods are adapted to be produced using unskilled labor. Our framework highlights a number of novel results. First, standardization is both an engine of growth and a potential barrier to it. As a result, growth is an inverse U-shaped function ofthe standardization rate (and of competition). Second, we characterize the growth and welfare maximizing speed of standardization. We show how optimal protection of intellectual property rights affecting the cost of standardization vary with the skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that, depending on how competition between innovating and standardizing firms is modelled and on parameter values, a new type of multiplicity of equilibria may arise. Finally, we study the implications of our model forthe skill-premium and we illustrate novel reasons for linking North-South trade to intellectual property rights protection.

Statistics

Citations

Dimensions.ai Metrics
73 citations in Web of Science®
81 citations in Scopus®
Google Scholar™

Altmetrics

Downloads

31 downloads since deposited on 10 May 2012
0 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Economics and Econometrics
Language:English
Date:1 March 2012
Deposited On:10 May 2012 09:02
Last Modified:23 Jan 2022 21:50
Publisher:Academic Press
ISSN:0022-0531
OA Status:Closed
Publisher DOI:https://doi.org/10.1016/j.jet.2010.09.001
Related URLs:https://www.zora.uzh.ch/51742/
Other Identification Number:merlin-id:6981