An Asymptotically Non-Scale Endogenous Growth Model

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

Abstract

This paper presents an endogenous growth model in which the economy grows without either scale effects or population growth. The key mechanism is substitution between investments in capital and technology when firms face increasing uncompensated knowledge spillovers. The model indicates that, as population increases, firms invest more in capital than in technology because there are more uncompensated knowledge spillovers as a result of both Marshall-Arrow-Romer and Jacobs externalities. Consequently, scale effects asymptotically diminish as population increases and disappear at a sufficiently large population while the economy can grow without population growth. In present-day industrialized economies, therefore, both scale effects and population growth have little influence over economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Endogenous growth; Scale effects; Non scale model; Balanced growth; Knowledge spillovers
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E10 - General

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