Bester, Helmut; Petrakis, Emmanuel - C.E.P.R. Discussion Papers - 2001
This Paper studies the inter-temporal problem of a monopolistic firm that engages in productivity-enhancing innovations … to reduce its labour costs. If the level of wages is sufficiently low, the firm's rate of productivity growth approaches … time. Otherwise, it will gradually reduce its innovation effort over time and ultimately terminate production. Productivity …