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The refoundation of the symmetric equilibrium in Schumpeterian growth models

Cozzi, G.; Giordani, P.E.; Zamparelli, L.

Authors

G. Cozzi

P.E. Giordani

L. Zamparelli



Abstract

We provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical R&D-driven growth models. We argue that the usual assumptions made in this class of models leave the agents indifferent as to where targeting research: hence, the problem of the allocation of R&D investment across sectors is indeterminate. By introducing an “ε-contamination of confidence” in the expected distribution of R&D investment, we prove that the symmetric structure of R&D investment is the unique rational expectations equilibrium compatible with ambiguity-averse agents adopting a maxmin strategy.

Citation

Cozzi, G., Giordani, P., & Zamparelli, L. (2007). The refoundation of the symmetric equilibrium in Schumpeterian growth models. Journal of Economic Theory, 136(1), 788-797. https://doi.org/10.1016/j.jet.2006.10.006

Journal Article Type Article
Publication Date Sep 1, 2007
Deposit Date Feb 15, 2010
Journal Journal of Economic Theory
Print ISSN 0022-0531
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 136
Issue 1
Pages 788-797
DOI https://doi.org/10.1016/j.jet.2006.10.006
Keywords R&D-driven growth models, Indeterminacy, Ambiguity, ε-contamination.
Public URL https://durham-repository.worktribe.com/output/1522121

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