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From Mind to Market: A Global, Dynamic Analysis of R&D

Lookup NU author(s): Dr Grega SmrkoljORCiD

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Abstract

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.

Publication metadata

Author(s): Hinloopen J, Smrkolj G, Wagener FOO

Publication type: Article

Publication status: Published

Journal: Journal of Economic Dynamics and Control

Year: 2013

Volume: 37

Issue: 12

Pages: 2729-2754

Print publication date: 01/12/2013

Online publication date: 25/07/2013

Acceptance date: 11/07/2013

Date deposited: 26/11/2014

ISSN (print): 0165-1889

Publisher: Elsevier BV

URL: http://dx.doi.org/10.1016/j.jedc.2013.07.009

DOI: 10.1016/j.jedc.2013.07.009

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