The refoundation of the symmetric equilibrium in Schumpeterian growth models

Cozzi, G.; Giordani, P.E.; Zamparelli, L.

Abstract

We provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical R&D-driven growth models. We argue that the usual assumptions made in this class of models leave the agents indifferent as to where targeting research: hence, the problem of the allocation of R&D investment across sectors is indeterminate. By introducing an “ε-contamination of confidence” in the expected distribution of R&D investment, we prove that the symmetric structure of R&D investment is the unique rational expectations equilibrium compatible with ambiguity-averse agents adopting a maxmin strategy.

Citation

Cozzi, G., Giordani, P., & Zamparelli, L. (2007). The refoundation of the symmetric equilibrium in Schumpeterian growth models. Journal of Economic Theory, 136(1), 788-797. https://doi.org/10.1016/j.jet.2006.10.006

• Journal Article Type: Article
• Publication Date: Sep 1, 2007
• Deposit Date: Feb 15, 2010
• Journal: Journal of Economic Theory
• Print ISSN: 0022-0531
• Electronic ISSN: 1095-7235
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 136
• Issue: 1
• Pages: 788-797
• DOI: https://doi.org/10.1016/j.jet.2006.10.006
• Keywords: R&D-driven growth models, Indeterminacy, Ambiguity, ε-contamination.
• Public URL: https://durham-repository.worktribe.com/output/1522121