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Quality-adjusted productivity gain in the propagation of innovation

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  • Satoshi Nakano
  • Kazuhiko Nishimura

Abstract

We introduce a class of production function whose inputs and outputs constitute multiples of quality and quantity. Under the efficiency unit approach, we precisely reduce innovation regarding qualitative and quantitative improvements of production to the measurement of quality-adjusted productivity gain. We then consider a system of compatible unit cost functions inclusive of such productivity improvements in any industry, for which we can solve for the ex-post equilibrium to examine the technological structural propagation. In this way, we can evaluate any given innovation with respect to its social welfare gain. We use this framework of multi-industry multi-factor production to study effective industry-wise research and development investment allocations. JEL classification: D24; O33; O41 Copyright Nakano and Nishimura. 2015

Suggested Citation

  • Satoshi Nakano & Kazuhiko Nishimura, 2015. "Quality-adjusted productivity gain in the propagation of innovation," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-16, December.
    • Handle: RePEc:spr:jecstr:v:4:y:2015:i:1:p:1-16:10.1186/s40008-015-0020-9
    DOI: 10.1186/s40008-015-0020-9
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    More about this item

    Keywords

    Productivity; Innovation; Efficiency unit; R&D policy; General equilibrium;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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