Becoming obsolete: Bankruptcy through technological progress

Konferenzbeitrag

This paper studies product obsolescence, the entry and exit of firms, and the evolution of firm size as foundation of endogenous economic growth. I develop a dynamic general equilibrium model with heterogenous firms to analyze firm behavior in an economic environment that is characterized by a growing knowledge base. It uses a simple mechanism of knowledge diffusion that induces growth of the general knowledge base. The growing knowledge base forces small firms using the least knowledge intensive production processes to leave the economy, since competition from new entrants is tougher, since they developed their products starting from a larger knowledge base. Exiting firms are found to be smaller and less productive than survivors. Another main insight of the model is the evolution of a cohort's firm size distribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft: Lektionen aus der Krise - Session: Endogenous Growth Theory ; No. A17-V3

Classification and Topics

• Classification: Wirtschaft ; Economic Growth and Aggregate Productivity: General ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Innovation; Research and Development; Technological Change; Intellectual Property Rights: General
• Subject: economic growth ; product obsolescence ; firm dynamics ; firm size distribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kleinert, Barbara
• Event: Veröffentlichung
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/49163
• Last update: 10.03.2025, 11:42 AM CET