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Never-ending Search for Innovation

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  • Jean-Michel Benkert, Igor Letina

Abstract

We provide a model of investment in innovation that is dynamic, features multiple heterogeneous research projects of which only one potentially leads to success, and in each period, the researcher chooses the set of projects to invest in. We show that if a search for innovation starts, it optimally does not end until the innovation is found—which will be never with a strictly positive probability.

Suggested Citation

  • Jean-Michel Benkert, Igor Letina, 2024. "Never-ending Search for Innovation," Diskussionsschriften dp2410, Universitaet Bern, Departement Volkswirtschaft.
    • Handle: RePEc:ube:dpvwib:dp2410
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    References listed on IDEAS

    as
    1. Igor Letina, 2016. "The road not taken: competition and the R&D portfolio," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 433-460, May.
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    More about this item

    Keywords

    Innovation; Optimal Search; Infinite Horizon;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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