From mind to market: a global, dynamic analysis of R&DJournal of Economic Dynamics and Control (2013)
Existing models of R&D are not easily reconciled with four observable aspects of R&D: initial technologies (ideas) need to be developed further, only a minority of initial ideas are successfully brought to the market, production and process innovations take place simultaneously (whereby, initially, there is no production at all), and process innovations are implemented for technologies that are destined to leave the market. We present a detailed bifurcation analysis for a dynamic model of R&D that captures these observations in one, unifying framework. As we provide a global analysis, we do not limit initial technologies to carry marginal costs that are below the choke price. We show that there always exists a critical value of initial marginal cost above which the firm does not initiate any (R&D) activity; the path to the saddle-point steady state is never globally optimal. We also sketch some tentative policy implications of our analysis.
- Optimal control,
Publication DateDecember, 2013
Citation InformationJeroen Hinloopen, Florian Wagener and Grega Smrkolj. "From mind to market: a global, dynamic analysis of R&D" Journal of Economic Dynamics and Control Vol. 37 Iss. 12 (2013) p. 2729 - 2754 ISSN: 0165-1889
Available at: http://works.bepress.com/hinloopen/10/