Competing engines of growth
Subtitle: innovation and standardization
By: [by] Daron Acemoglu, Gino Gancia [and] Fabrizio Zilibotti .
Contributors: Gancia, Gino A.; Zilibotti, Fabrizio; Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 10-7; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 10-07.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Number of pages: 46
Description: We study a dynamic general equilibrium model where innovation takes the form of the introduction 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 in an inverse U-shaped function of the standardization rate (and of competition). Second, we characterize the growth and welfare maximizing speed of standardization. We show how optimal IPR policies affecting the cost of standardization vary with the skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that the interplay between innovation and standardization may lead to multiple equilibria. Finally, we study the implications of our model for the skill-premium and we illustrate novel reasons for linking North-South trade to intellectual property rights protection. Keywords: growth, technology adoption, competition policy, intellectual property rights. JEL Classifications: F43, O31, O33, O34.
Notes: "April 23, 2010."

Includes bibliographical references (p. 43-46).

Abstract in HTML and working paper for download in PDF available via World Wide Web at the Social Science Research Network.