| Popis: |
According to the 1rst generation models of endogenous growth based on expanding product variety, the market economy unambiguously generates too little R&D. Later, by disentangling returns to specialization from the market power parameter, it was shown that with su7ciently low returns to specialization too much R&D can occur. The present paper takes a step further, disentangling the market power parameter from the capital share in 1nal output. At a theoretical level this helps 1nding too much R&D as well. On the other hand, in view of the empirically realistic order of magnitude between the parameters, disentangling market power and capital share tends to diminish the scope for excess R&D. Finally, by di:erentiating between net and gross returns to specialization we demonstrate what drives the di:ering ine7ciency results in this literature. c |
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