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An Asymptotically Non-Scale Endogenous Growth Model

Harashima, Taiji (2010): An Asymptotically Non-Scale Endogenous Growth Model.

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Abstract

This paper presents an endogenous growth model in which the economy grows without either scale effects or population growth. The key mechanisms are an increase in uncompensated knowledge spillovers from an increased number of firms and substitution between investments in capital and technology. The model indicates that an increase in population does not make investments in technology more attractive than those in capital because of increased uncompensated knowledge spillovers as a result of both Marshall-Arrow-Romer and Jacobs externalities. Scale effects are generated by the non-rivalness of technology, but they are cancelled out by increases in the amount of uncompensated knowledge spillovers that are also generated by the non-rivalness of technology.

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