Based partially on the belief that innovation is not possible under perfect competition, a huge number of papers have been written about the nature of innovation under monopoly or oligopoly. In fact, competitive rents can and do sustain innovation in the complete absence of monopoly power....

Market booms are often followed by dramatic falls. To explain this requires an asymmetry in the underlying shocks. A straightforward model of technological progress generates asymmetries that are also the source of growth cycles. Assuming a representative consumer, we show that the stock market...

Intellectual property protection involves a trade-off between the undesirability of monopoly and the desirable encouragement of creation and innovation. As the scale of the market increases, due either to economic and population growth or to the expansion of trade through treaties such as the...

We construct a competitive model of innovation and growth under constant returns to scale. Previous models of growth under constant returns cannot model technological innovation. Current models of endogenous innovation rely on the interplay between increasing returns and monopolistic markets. In...

Innovation and the adoption of new ideas are fundamental to economic progress. Here we examine the underlying economics of the market for ideas. From a positive perspective, we examine how such markets function with and without government intervention. From a normative perspective, we examine...

We introduce two modifications into the standard real business cycles model: habit persistence preferences and limitations on intersectoral mobility. The resulting model is consistent with the observed mean equity premium, mean risk free rate and Sharpe ration on equity. With respect to the...

Growth theorists have almost always adopted the assumption of balanced growth in their investigations of development phenomena. In reality countries growth rates oscillate, sometimes wildly, around some average value. The latter is often taken to represent the balanced rate to which the...

We study the asymptotic stability of infinite horizon concave programming problems. Turnpike theorems for this class of models generally have to assume a low level of discounting. By generalizing our precedent work we provide a one-parameter family of verifiable conditions that guarantee...

In this paper we study the indeterminacy of equilibria in infinite horizon capital accumulation models with technological externalities. Our investigation encompasses both models with bounded and unbounded accumulation paths, and models with one and two sectors of production. Under reasonable...

We study a general equilibrium model where agents search for production and trading opportunities, that generalizes the existing literature by considering a large number of differentiated commodities and agents with idiosyncratic tastes. Thus, agents must chose nontrivial exchange as well as...