Endogenous Technological Change

1990/10/01 by Paul M. Romer, Paul Romer · 16,283 citations
Economics, Econometrics and Finance · #Economic theories and models #Economics #Endogenous growth theory #Excludability #Human capital #Industrial organization #Investment (military) #Macroeconomics #Market economy #Microeconomics #Monopolistic competition #Monopoly #Population #Population growth #Profit (economics) #Public good #Stock (firearms) #Technological change

paper · doi:10.1086/261725

published in Journal of Political Economy 98(5, Part 2), S71-S102 (University of Chicago Press)

openalex publication_date 1990/10/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/06

Abstract

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

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