Technology lock-in with horizontal and vertical innovations through limited R&D spending

Arbeitspapier

In this paper we analyze an inter-temporal optimization problem of a representative firm that invests in horizontal and vertical innovations and that faces a constraint with respect to total R&D spending. We find that there can exist two different steady-states of the economy when the amount of research spending falls short of an endogenously determined threshold: one with higher productivities and less new technologies being developed, and the other with more technoligies being created and lower productivities. But, for a higher amount of R&D spending the steady-state becomes unique and the firm produces the whole spectrum of available technologies. Thus, a lock-in effect may arise that, however, can be overcome by raising R&D spending sufficiently.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WWZ Working Paper ; No. 2017/04

Classification and Topics

• Classification: Wirtschaft ; Optimization Techniques; Programming Models; Dynamic Analysis ; Management of Technological Innovation and R&D
• Subject: multiple steady-states ; lock-in ; innovations ; R&D constraint ; optimal control

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Bondarev, Anton ; Greiner, Alfred
• Event: Veröffentlichung
• (who): University of Basel, Center of Business and Economics (WWZ)
• (where): Basel
• (when): 2017

Further information

• DOI: doi:10.5451/unibas-ep61313
• Handle: http://hdl.handle.net/10419/162182
• Last update: 10.03.2025, 11:43 AM CET