The equilibrium allocation of creative capital to R&D in a dynamic creative region

Batabyal, Amitrajeet and Beladi, Hamid (2014): The equilibrium allocation of creative capital to R&D in a dynamic creative region. Published in: Theoretical Economics Letters , Vol. 4, (16 June 2014): pp. 425-430.

Abstract

In this note, we analyze a stylized creative region that is populated by members of the creative class. The representative individual in this region possesses a constant relative risk aversion (CRRA) utility function. The existing creative capital is used to produce a final consumption good and to conduct R&D. We first derive the equilibrium level of creative capital that is allocated to the R&D sector. Next, we show how this level is affected by changes in the parameters and in some of the model constants. Finally, we discuss the policy implications of our comparative statics results.

• Item Type: MPRA Paper
• Language: English
• Keywords: Creative Capital, Creative Class, Dynamics, Economic Growth, R&D
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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