Growth in this model is driven by technological change that arises from intentional
investment decisions made by profit maximizing agents. The distinguishing feature of the
technology as an input is that it is neither a conventional good nor a public good; it is a
nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival
good, price-taking competition cannot be supported, and instead, the equilibriumis one
with monopolistic competition. The main conclusions are that the stock of human capital
determines the rate of growth, that too little human capital is devoted to research in
equilibrium, that integration into world markets will increase growth rates, and that
having a large population is not sufficient to generate growth.
*Published:
Journal of Political Economy, Vol. 98, No. 5, Part 2, pp. S71-S102, (1990).
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