Growth with competing technologies and bounded rationality
Growth with competing technologies and bounded rationality
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.
University of Southampton
Grimalda, Gianluca
87ef7de3-8eef-4985-929b-703f233567b0
2002
Grimalda, Gianluca
87ef7de3-8eef-4985-929b-703f233567b0
Grimalda, Gianluca
(2002)
Growth with competing technologies and bounded rationality
(Discussion Papers in Economics and Econometrics, 205)
Southampton, UK.
University of Southampton
34pp.
Record type:
Monograph
(Discussion Paper)
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.
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Published date: 2002
Additional Information:
alternative title: Growth With Competing TechnologiesAnd Bounded Rationality
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Local EPrints ID: 33389
URI: http://eprints.soton.ac.uk/id/eprint/33389
PURE UUID: 2ff5cc5e-853d-4ee2-8d76-ae83b90187b7
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Date deposited: 18 May 2006
Last modified: 15 Mar 2024 07:43
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Author:
Gianluca Grimalda
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