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| Author: | Futagami, K. Ohkusa, Y. |
| Title: | The quality ladder and product variety: larger economies may not grow faster |
| Journal: | Japanese Economic Review
2003 : SEP, VOL. 54:3, p. 336-351 |
| Index terms: | Growth Innovation Product quality |
| Language: | eng |
| Abstract: | An endogenous growth model that combines the quality ladder model and the variety expansion model is constructed. Firms enter an imitation race. Monopolistic competition prevails after the imitation process and a new innovation race begins. By inventing a higher quality product, a successful firm can take over the entire market. However, the existence of a variety of products limits the price that the successful firm can change. It is shown that the present model exhibits an inverted U-shape relationship between market size and growth rate. |
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