Work

Innovation and Growth With Rich and Poor Consumers

Year: 2005

Type: article

Abstract: This work studies the impact of income inequality on the level of innovative activities in a model where innovations result in quality improvements. In contrast to the standard model of innovations and growth, the equilibrium outcome may be characterized by a situation where not only the quality leader but also producers of worse qualities are on the market. In that case the quality leader sells to the rich, whereas the producer of the second-best quality sells to the poor. In general, we find that a more equal distribution of income is favourable for innovation incentives. This is consistent with empirical evidence suggesting that countries with a more equal distribution of income have grown faster.

Source: Metroeconomica

DOI: 10.1111/j.1467-999x.2005.00215.x

Authors: Josef Zweimuller, Johann K. Brunner

Institutions: Center for Economic and Policy Research, University of Zurich, Centre for Economic Policy Research, Johannes Kepler University of Linz, Ifo Institute for Economic Research

Language: English

Topic: Economic Growth and Productivity

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, No poverty, Decent work and economic growth

Open Access status: green

OpenAlex ID: W2090423397

FWCI: 3.273

Cites: 17

Cited by: 69

Related to: 10