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How much horizontal innovation is consistent with vertical innovation?

Cozzi, G.; Spinesi, L.

Authors

G. Cozzi

L. Spinesi



Abstract

R&D-driven growth theory emphasizes vertical and horizontal innovation activities for long run growth. In this paper, we show that the real world co-existence of both innovative activities restricts the admissible laws of motion for horizontal innovation, thereby allowing to test the admissible range of intertemporal horizontal R&D spillovers. Private arbitrage between manufacturing and vertically innovating makes quality improving R&D profitable if and only if the horizontal innovation rate does not exceed the population growth rate. Hence, the mere observation of positive vertical innovation suggests that the number of new sectors has not been increasing faster than population.

Citation

Cozzi, G., & Spinesi, L. (2006). How much horizontal innovation is consistent with vertical innovation?. Research in Economics, 60(1), 47-53. https://doi.org/10.1016/j.rie.2005.12.001

Journal Article Type Article
Publication Date Mar 1, 2006
Deposit Date Feb 16, 2010
Journal Research in Economics
Print ISSN 1090-9443
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 60
Issue 1
Pages 47-53
DOI https://doi.org/10.1016/j.rie.2005.12.001
Keywords Schumpeterian growth theory, Horizontal and vertical innovation, Scale effects.
Public URL https://durham-repository.worktribe.com/output/1523533

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