Review of Economic Studies Vol. 72 No. 1 2005
Special Interests and Technological Change
Abstract
We model an OLG economy where productivity growth comes from two alternative sources: process innovation and learning-by-doing. There is a trade-off between the two in so far as frequent technological updates reduce the scope for learning on existing technologies. A conflict is shown to arise between the young and the old, because the former favor innovation while the latter prefer learning. We model the interaction between different generations and short-lived policy makers as a dynamic common agency problem, where competing generations invest a certain amount of resources to lobby either for the maintainance of the current technology or the adoption of a new one. By focusing on truthful Markov perfect equilibria, we characterize the political equilibrium and show its dependence on the underlying technological parameters.
- DOI
- 10.1111/0034-6527.00323
- Volume
- 72
- Issue
- 1
- Pages
- 43-56
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref