Growth with competing technologies and bounded rationality


Grimalda, Gianluca (2002) Growth with competing technologies and bounded rationality. Southampton, UK, University of Southampton, 34pp. (Discussion Papers in Economics and Econometrics, 0205).

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Description/Abstract

I develop a model of growth based on three assumptions: first, a variety of technologies characterised by different degrees of labour skill intensity, where technological change is localized; second, agents are boundedly rational, and the aggregate rule of motion of their behaviour follows a replicator dynamics; third, markets do not clear instantaneously, with prices adjusting gradually. For simplicity, I study the case of two technologies and two labour markets, one for skilled and one for unskilled labour.

The model is investigated by means of local stability and computer numerical analysis. Two types of steady states obtain, each characterised by the complete specialization of production into one of the two technologies. Convergence towards the low-growth steady state, associated with the unskilled labour intensive technology, occurs under adverse structural conditions, such as marked initial skill shortage and high skill upgrade costs. This result of lock-in to the inferior steady state is interpreted as co-ordination failure, in that market forces do not always provide sufficient incentives to ensure a high-growth path.

Item Type: Monograph (Discussion Paper)
Additional Information: alternative title: Growth With Competing TechnologiesAnd Bounded Rationality
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 33389
Date Deposited: 18 May 2006
Last Modified: 27 Mar 2014 18:20
Publisher: University of Southampton
URI: http://eprints.soton.ac.uk/id/eprint/33389

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