TY  - GEN
AB  - In this paper we present an inter-temporal optimization problem of a representative
R&D firm that simultaneously invests in horizontal and vertical innovations.
We posit that learning-by-doing makes the process of quality improvements a positive
function of the number of existing technologies with the function displaying a
convex-concave form. We show that multiple steady-states can arise with two being
saddle point stable and one unstable with complex conjugate eigenvalues. Thus, a
threshold with respect to the variety of technologies exists that separates the two
basins of attractions. From an economic point of view, this implies that a lock-in
effect can occur such that it is optimal for the firm to produce only few technologies
at a low quality when the initial number of technologies falls short of the threshold.
Hence, history matters as concerns the state of development implying that past investments
and innovations determine whether the firm produces a large or a small
variety of high- or low-quality technologies, respectively.
DA  - 2014
DO  - 10.4119/unibi/2915528
KW  - Optimal control
KW  - horizontal and vertical innovations
KW  - multiple steadystates
KW  - thresholds
KW  - lock-in
LA  - eng
PY  - 2014
SN  - 2196-2723
SP  - 17-
TI  - Optimal R&D investment with learning-by-doing: Multiple steady-states and thresholds
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29155282
Y2  - 2024-11-24T21:58:54
ER  -