Welfare analysis in a Schumpeterian growth model with capital:
In this note we compare the laissez-faire steady-state solution in the Howitt and Aghion (1998) model to the social optimum. The analysis offers several new insights in comparison to the welfare analysis in Aghion and Howitt (1992). We find various new distortions between private and optimal solutio...
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| Main Authors: | , , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Bonn
IZA
2001
|
| Series: | Discussion paper / Forschungsinstitut zur Zukunft der Arbeit
283 |
| Subjects: | |
| Summary: | In this note we compare the laissez-faire steady-state solution in the Howitt and Aghion (1998) model to the social optimum. The analysis offers several new insights in comparison to the welfare analysis in Aghion and Howitt (1992). We find various new distortions between private and optimal solution. First, a monopoly distortion effect generates too little capital accumulation in the private solution because households' gross return per unit of capital will be lower than in the social optimum due to monopoly power. Second, a cost-benefit gap effect leads to excessive research in the private solution because the planner is interested in the average technology whereas the private researcher is interested in the leading edge technology. Third, we decompose the well-known intertemporal spillover effect into three subeffects and clarify why the planner uses the interest rate as discount rate. |
| Physical Description: | 14 S. graph. Darst. |
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| 520 | 8 | |a In this note we compare the laissez-faire steady-state solution in the Howitt and Aghion (1998) model to the social optimum. The analysis offers several new insights in comparison to the welfare analysis in Aghion and Howitt (1992). We find various new distortions between private and optimal solution. First, a monopoly distortion effect generates too little capital accumulation in the private solution because households' gross return per unit of capital will be lower than in the social optimum due to monopoly power. Second, a cost-benefit gap effect leads to excessive research in the private solution because the planner is interested in the average technology whereas the private researcher is interested in the leading edge technology. Third, we decompose the well-known intertemporal spillover effect into three subeffects and clarify why the planner uses the interest rate as discount rate. | |
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| id | DE-604.BV013871915 |
| illustrated | Illustrated |
| indexdate | 2024-07-09T18:53:32Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-009489000 |
| oclc_num | 248284030 |
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| owner | DE-12 DE-945 DE-706 DE-83 |
| owner_facet | DE-12 DE-945 DE-706 DE-83 |
| physical | 14 S. graph. Darst. |
| publishDate | 2001 |
| publishDateSearch | 2001 |
| publishDateSort | 2001 |
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| series2 | Discussion paper / Forschungsinstitut zur Zukunft der Arbeit |
| spelling | Hagedorn, Marcus 1973- Verfasser (DE-588)12308346X aut Welfare analysis in a Schumpeterian growth model with capital Marcus Hagedorn ; Ashok Kaul ; Volker Reinthaler Bonn IZA 2001 14 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier Discussion paper / Forschungsinstitut zur Zukunft der Arbeit 283 In this note we compare the laissez-faire steady-state solution in the Howitt and Aghion (1998) model to the social optimum. The analysis offers several new insights in comparison to the welfare analysis in Aghion and Howitt (1992). We find various new distortions between private and optimal solution. First, a monopoly distortion effect generates too little capital accumulation in the private solution because households' gross return per unit of capital will be lower than in the social optimum due to monopoly power. Second, a cost-benefit gap effect leads to excessive research in the private solution because the planner is interested in the average technology whereas the private researcher is interested in the leading edge technology. Third, we decompose the well-known intertemporal spillover effect into three subeffects and clarify why the planner uses the interest rate as discount rate. Soziale Wohlfahrtsfunktion / Pareto-Optimum / Steady-State-Wachstum / Vergleich / Neue Wachstumstheorie / Investition / Innovation / Technischer Fortschritt / Theorie social planning model Kaul, Ashok 1972- Verfasser (DE-588)123086787 aut Reinthaler, Volker Verfasser aut Forschungsinstitut zur Zukunft der Arbeit Discussion paper 283 (DE-604)BV012263912 283 |
| spellingShingle | Hagedorn, Marcus 1973- Kaul, Ashok 1972- Reinthaler, Volker Welfare analysis in a Schumpeterian growth model with capital Soziale Wohlfahrtsfunktion / Pareto-Optimum / Steady-State-Wachstum / Vergleich / Neue Wachstumstheorie / Investition / Innovation / Technischer Fortschritt / Theorie social planning model |
| title | Welfare analysis in a Schumpeterian growth model with capital |
| title_auth | Welfare analysis in a Schumpeterian growth model with capital |
| title_exact_search | Welfare analysis in a Schumpeterian growth model with capital |
| title_full | Welfare analysis in a Schumpeterian growth model with capital Marcus Hagedorn ; Ashok Kaul ; Volker Reinthaler |
| title_fullStr | Welfare analysis in a Schumpeterian growth model with capital Marcus Hagedorn ; Ashok Kaul ; Volker Reinthaler |
| title_full_unstemmed | Welfare analysis in a Schumpeterian growth model with capital Marcus Hagedorn ; Ashok Kaul ; Volker Reinthaler |
| title_short | Welfare analysis in a Schumpeterian growth model with capital |
| title_sort | welfare analysis in a schumpeterian growth model with capital |
| topic | Soziale Wohlfahrtsfunktion / Pareto-Optimum / Steady-State-Wachstum / Vergleich / Neue Wachstumstheorie / Investition / Innovation / Technischer Fortschritt / Theorie social planning model |
| topic_facet | Soziale Wohlfahrtsfunktion / Pareto-Optimum / Steady-State-Wachstum / Vergleich / Neue Wachstumstheorie / Investition / Innovation / Technischer Fortschritt / Theorie social planning model |
| volume_link | (DE-604)BV012263912 |
| work_keys_str_mv | AT hagedornmarcus welfareanalysisinaschumpeteriangrowthmodelwithcapital AT kaulashok welfareanalysisinaschumpeteriangrowthmodelwithcapital AT reinthalervolker welfareanalysisinaschumpeteriangrowthmodelwithcapital |