A Second-Order Approximation to Technology Choices

Resources used in scientific activities are, as any other, scarce. Hence, the economic system has, in every time moment, to choose how to allocate technological inputs. A technology choices model is developed, where scarce scientific resources are alternatively allocated to basic science activities and to applied technology uses. We find that saddle path stability holds for a not too high intertemporal discount rate. The accomplished result is found for a generic quadratic objective function, that is, for a second-order Taylor series approximation of a felicity function regarding technology development goals.