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Optimal R&D Competition and Economic Growth

Author

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  • Gwanghoon Lee

    (Chung-Ang University)

Abstract

The optimality of R&D competition and its implications on growth and welfare are analyzed in a dynamic general equilibrium model. By explicitly incorporating pre-emptive R&D competition, the relationship between the intensity of competition and the growth rate can be investigated. This paper shows that in the competitive growth path, the number of research firms is larger and the rate of growth is lower than in the optimal growth path. By reducing entry into R&D competition by imposing an entry fee from which the winner of competition is subsidized, this sub-optimality arising from excessive competition could be overcome.

Suggested Citation

  • Gwanghoon Lee, 2006. "Optimal R&D Competition and Economic Growth," Korean Economic Review, Korean Economic Association, vol. 22, pages 267-297.
    • Handle: RePEc:kea:keappr:ker-200612-22-2-04
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    R&D competition; Economic growth; Constrained optimality; Human capital;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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