Technological progress as a major source of economic development stems from the interaction of two types of innovations, drastic and incremental. While the former sets the fundamental pace of economic progress by redefining production possibilities as Schumpeter strongly emphasized, the latter...

This paper establishes a model, where up-stream firms 'produce' drastic innovations and down-stream firms specialize in final goods production. A drastic innovation obsolesces the existing technology but down-stream firms can improve it by their incremental innovations. The economy develops in...

Both the theory and practice of using hedonic regressions to quality adjust inflation estimates are implicitly developed for monopolistic competitive markets. We demonstrate conditions required for consistent OLS estimation of hedonic regression for an oligopoly. To reflect firm heterogeneity,...

The static differentiated product demand model when applied to products with rapid product turnover and declining prices, yields implausible results. One response is to explicitly model the inter-temporal choices of consumers but computational demands require restrictive assumptions on consumer...

Built on the location model, this paper studies the rivalry of two firms in an industry through two-part tariffs. It is found that kinky profit functions are responsible for the coincidence of imperfectly competitive equilibrium and cartelization outcome. A duopoly likely results in higher entry...

This paper proposes a tractable alternative to Cobb-Douglas utility to resolve the problems of lack of reservation price and income effects in demand functions derived from Cobb-Douglas utility or quasilinear utility. Another advantage of this alternative is that it provides a closed-form...

The static differentiated product demand model when applied to products with rapid product turnover and declining prices, yields implausible results. One response is to explicitly model the inter-temporal choices of consumers but computational demands require restrictive assumptions on consumer...

Built on the location model, this paper studies the rivalry of two firms in an industry through two-part tariffs. It is found that kinky profit functions are responsible for the coincidence of imperfectly competitive equilibrium and cartelization outcome. A duopoly likely results in higher entry...

This paper proposes a tractable alternative to Cobb-Douglas utility to resolve the problems of lack of reservation price and income effects in demand functions derived from Cobb-Douglas utility or quasilinear utility. Another advantage of this alternative is that it provides a closed-form...

Both the theory and practice of using hedonic regressions to quality adjust inflation estimates are implicitly developed for monopolistic competitive markets. We demonstrate conditions required for consistent OLS estimation of hedonic regression for an oligopoly. To reflect firm heterogeneity,...