A Model of Creative Destruction with Undiversifiable Risk and Optimising Households
Bibliographic Data
| ID | 9714110 |
|---|---|
| Authors | Klaus Wälde (0000-0001-5717-0383, University of Dortmund and The World Bank, corresponding author) |
| Year | 1999 |
| Volume | 109 |
| Issue | 454 |
| Pages | 156-171 |
| Publication date | 1999-03-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/1468-0297.00423 |
| OpenAlex | W2048717170 |
| Language | EN |
| Citations received | 1 |
| References cited | 5 |
This paper studies optimal household behaviour in a model of creative destruction. The saving technology is characterised by stochastic returns that follow a Poisson process. It is shown that equilibrium conditions with optimising households differ substantially from equilibrium conditions where investment in R&D is determined by firms. Three out of four market failures disappear and a new market failure resulting from a complementarity in financing R&D is identified. Studying the social optimum shows that it contains as the special case of risk neutrality the social optimum derived in the literature
Complementarity (molecular biology · Econometrics · Economics · Investment (military · Microeconomics · Neutrality · Poisson distribution · Poisson process · Economic Growth and Productivity · Economic theories and models · Housing Market and Economics · Mathematics
| Citations per year | 0.05 |
|---|---|
| Citation span | 2006 - 2006 (1) |
| Highly cited | No |