TY  - JOUR
AU  - Young,Alwyn
TI  - Invention and Bounded Learning by Doing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3712
PY  - 1991
Y2  - May 1991
UR  - http://www.nber.org/papers/w3712
L1  - http://www.nber.org/papers/w3712.pdf
N1  - Author contact info:
Alwyn Young
London School of EconomicsAB  - This paper presents a model of the interaction between invention and learning by doing. Learning depends upon invention in that learning by doing is viewed as the serendipitous exploration of the finite productive potential of invented technologies. At the same time, the profitability of costly invention is dependent upon learning in that costs of production depend upon the society's aggregate historical learning experience. The resulting model is a true hybrid. With small markets, the profitability of invention is low, and hence the rate of invention becomes the constraining factor in growth. With large markets, invention is very profitable and tends to pull ahead of the society's learning experience. The consequent growing gap between the technological frontier and the society's industrial maturity squeezes returns, leading to an equilibrium in which the rate of invention (and growth) is paced by the society's rate of learning.
ER  -