Giordani, Paolo E. and Zamparelli, Luca (2009): On Robust Asymmetric Equilibria in Asymmetric R&D-Driven Growth Economies.
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In an R&D-driven growth model with asymmetric fundamentals the steady state equilibrium R&D investments are industry-specific and they are such that R&D returns are equalized across industries. Return equalization, however, makes investors indifferent as to where to target research and, hence, the problem of allocation of R&D investments across industries is indeterminate. Agents' indifference creates an ambiguous investment scenario. We assume that agents hold "ambiguous" beliefs on the per-industry profitability of their R&D investments. Investors' aversion towards ambiguity (in the sense of Gilboa-Schmeidler, 1989) eliminates the indeterminacy of the R&D investment problem. In particular, we prove that the asymmetric return-equalizing equilibrium is robust against a however small degree of investors' aversion to ambiguity.
|Item Type:||MPRA Paper|
|Original Title:||On Robust Asymmetric Equilibria in Asymmetric R&D-Driven Growth Economies|
|Keywords:||R&D driven growth models, symmetry/asymmetry, ambiguity|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D
|Depositing User:||Luca Zamparelli|
|Date Deposited:||08. Sep 2009 13:37|
|Last Modified:||12. Feb 2013 20:46|
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