The aim of this paper is to investigate the nexus between demand patterns and innovation as it stems from research efforts and the extent of specialization. In the proposed model an innovation race conducted by entrants investing in research and development against established incumbents raises...

The paper investigates the mechanics through which novel technological principles are developed and diffused throughout an economy consisting of a technologically heterogeneous ensemble of firms. In the model entrepreneurs invest in the discovery and in the diffusion of a technological principle...