Essays on endogenous technological progress

This dissertation analyzes several issues involving the economics of endogenous technological progress: (1) The effects of firm size on the choice of R&D effort between process and product innovation; (2) The transitional and long-run dynamic effects of general-purpose technologies on Schumpeterian growth in a closed economy setting; (3) The interactions among endogenous technological change, the pattern of trade, and income distribution within each country.; Chapter 2 develops a differentiated-goods duopoly model in which firms engage in Cournot-Nash quantity competition. I showed that an increase in a firm's efforts devoted to product innovation (given that it is in the product R&D regime) increases its incentives to switch from product to process innovation. Once the firm is in the process R&D regime, it will perform process R&D indefinitely.; Chapter 3 builds a quality-ladders model of scale-invariant Schumpeterian growth. The introduction of a new general-purpose technology increases Schumpeterian growth and per-capita R&D investment in the final steady-state. During the transition path from the initial to the final steady-state equilibrium, the measure of industries that adopt the new general-purpose technology increases, consumption per capita falls, and the interest rate increases. The growth rate of the stock market depends negatively on the rate of the general-purpose technology diffusion process and the magnitude of the general-purpose technology-ridden R&D productivity gains; and positively on the rate of population growth. In addition, the model generates transitional growth cycles of per-capita GNP.; Chapter 4 constructs a two-country (Home and Foreign) general equilibrium model of Schumpeterian growth without scale effects. The scale effects property is removed by introducing two distinct specifications in the knowledge production function: the permanent effect on growth (PEG) specification, which allows policy effects on long-run growth; and the temporary effects on growth (TEG) specification, which generates exogenous long-run economic growth. Under the PEG specification, an increase in the rate of population growth raises Home's relative wage and decreases its range of goods exported to Foreign. Under the TEG specification, an increase in the rate of population growth rate lowers Home's relative wage and increases its range of goods exported to Foreign.