TY  - JOUR
AU  - Acemoglu, Daron
TI  - Diversity and Technological Progress
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16984
PY  - 2011
Y2  - April 2011
DO  - 10.3386/w16984
UR  - http://www.nber.org/papers/w16984
L1  - http://www.nber.org/papers/w16984.pdf
N1  - Author contact info:
Daron Acemoglu
Department of Economics, E52-446
Massachusetts Institute of Technology
77 Massachusetts Avenue
Cambridge, MA 02139
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
M1  - published as Daron Acemoglu. "Diversity and Technological Progress," in Josh Lerner and Scott Stern, editors, "The Rate and Direction of Inventive Activity Revisited" University of Chicago Press (2012)

AB  - This paper proposes a tractable model to study the equilibrium diversity of technological progress and shows that equilibrium technological progress may exhibit too little diversity (too much conformity), in particular, foregoing socially beneficial investments in "alternative" technologies that will be used at some point in the future. The presence of future innovations that will replace current innovations imply that social benefits from innovation are not fully internalized. As a consequence, the market favors technologies that generate current gains relative to those that will bear fruit in the future; current innovations in research lines that will be profitable in the future are discouraged because current innovations are typically followed by further innovations before they can be profitably marketed. A social planner would choose a more diverse research portfolio and would induce a higher growth rate than the equilibrium allocation. The diversity of researchers is a partial (imperfect) remedy against the misallocation induced by the market. Researchers with different interests, competences or ideas may choose non-profit maximizing and thus more diverse research portfolios, indirectly contributing to economic growth.
ER  -