Special Interests and Technological change

Bellettini, Giorgio ; Ottaviano, Gianmarco (1999) Special Interests and Technological change. Bologna: Dipartimento di Scienze economiche DSE, p. 16. DOI 10.6092/unibo/amsacta/4969. In: Quaderni - Working Paper DSE (340).
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Abstract

We model an OLG economy where productivity growth comes from two alternative sources: process innovation and learning-by-doing. There is a trade-off between the two in so far as frequent technological updates reduce the scope for learning on existing technologies. A conflict is shown to arise between the young and the old, because the former favor innovation while the latter prefer learning. We model the interaction between different generations and short-lived policy makers as a dynamic common agency problem, where competing generations invest a certain amount of resources to lobby either for the maintainance of the current technology or the adoption of a new one. By focusing on truthful Markov perfect equilibria, we characterize the political equilibrium and show its dependence on the underlying technological parameters.

Abstract
Document type
Monograph (Working Paper)
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CreatorsAffiliationORCID
Bellettini, Giorgio
Ottaviano, Gianmarco
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23 Mar 2016 08:01
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23 Mar 2016 08:01
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