Income distribution and demand-induced innovations

• 成果类型: Article
• 署名作者: Foellmi, Reto; Zweimueller, Josef
• 署名单位: University of Zurich
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1111/j.1467-937X.2006.00403.x
• 发表日期: 2006
• 页码: 941-960
• 关键词: inequality; MODEL

摘要

We introduce non-homothetic preferences into an innovation-based growth model and study how income and wealth inequality affect economic growth. We identify a (positive) price effect-where increasing inequality allows innovators to charge higher prices and (negative) market-size effects-with higher inequality implying smaller markets for new goods and/or a slower transition of new goods into mass markets. It turns out that price effects dominate market-size effects. We also show that a redistribution from the poor to the rich may be Pareto improving for low levels of inequality.