Arbeitspapier
Credit constrained R&D spending and technological change
Firms often rely on external financing in order to conduct R&D. The question is to what extend discriminatory behaviour of the funds provider affects the industry evolution. The model is based on an evolutionary framework by Nelson and Winter. A firm chooses its R&D spending in an adaptive fashion where technological improvement is essential for survival in the competitive market. Firms can finance their activities by using retained profits or applying for credit. However, they have a clear hierarchy in choosing the source of funds and saved profits are always used up first. There is endogenous discriminatory lending as the banking sector provides credit according the firms' individual features. It compares profitability and market share across firms when assessing creditworthiness. The model is able to capture features of innovation and diffusion of technology. Results show that the availability of credit is crucial for technological change in a non-linear fashion and that the industry evolves faster if the bank values market share more in assessing creditworthiness.
- Language
-
Englisch
- Bibliographic citation
-
Series: Center for Mathematical Economics Working Papers ; No. 532
- Classification
-
Wirtschaft
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Technological Change: Choices and Consequences; Diffusion Processes
One, Two, and Multisector Growth Models
- Subject
-
Heterogeneous Agents Models
Innovation
Financial Constraints
- Event
-
Geistige Schöpfung
- (who)
-
Aßmuth, Pascal
- Event
-
Veröffentlichung
- (who)
-
Bielefeld University, Center for Mathematical Economics (IMW)
- (where)
-
Bielefeld
- (when)
-
2014
- DOI
-
doi:10.2139/ssrn.2536388
- Handle
- URN
-
urn:nbn:de:0070-pub-27591315
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Aßmuth, Pascal
- Bielefeld University, Center for Mathematical Economics (IMW)
Time of origin
- 2014
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