The authors examine an endogenous growth model in which market frictions are an integral part of the economic environment. Workers invest in education when young, which raises their productivity once employed. The level of schooling also acts as a key determinant of the rate of economic growth...

We study pricing and product diffusion in a dynamic general equilibrium framework with product market frictions. Ongoing R&D activity leads, with an endogenously determined probability, to continual improvements in product quality. We characterize the steady-state equilibrium with endogenous...