RandD_PS

RandD_PS - Problem Set 6: Innovation and Growth Econ720....

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Problem Set 6: Innovation and Growth Econ720. Fall 2009. Prof. Lutz Hendricks 1 Stochastic patent duration [Due to Matt Doyle] Consider a version of the &Expanding Variety of Goods model in which innovatorsmonopoly power diminishes over time. Otherwise the model is standard. Demographics: There is a single representative household. Endowments: The household is endowed with L units of labor, which can only be used for work. Preferences: U = Z 1 c 1 & & & 1 1 & & e & t dt: (1) Technology: Final goods are produced from labor and intermediate inputs according to Y i = AL 1 & i N X j =1 ( X ij ) ; (2) where < < 1 , Y i is output, L i is labor input, X ij is the input of the j th type of the intermediate good, and N is the number of varieties. It takes one unit of nal goods to produce one unit of intermediates: X j = Y j (3) It costs units of the nal good to create a new type of intermediate good....
View Full Document

Page1 / 2

RandD_PS - Problem Set 6: Innovation and Growth Econ720....

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online