This paper proposes a Schumpeterian growth model generalizing the existing theory : we exploit the formalization of a circular product differentiation model of Salop (1979) to take into account the fact that knowledge inherent in a given sector can diffuse variously among R&D sectors, ranging from local to global diffusion.We explain how this shapes the pools of knowledge in which each sector draws from to produced innovations. Introducing explicitly knowledge diffusion allows us to shed a new light on several questions : how to explain that growth can be over or sub-optimal ? Patent or secrecy : how should monopolies be protected ? Where does the property of scale effects exactly come from ?
- O31: Innovation and Invention: Processes and Incentives
- O33: Technological Change: Choices and Consequences • Diffusion Processes
- O41: One, Two, and Multisector Growth Models
TSE Working Paper, n. 10-204, November 2010