Microeconomic Foundation of the S-Curve Hypothesis: A Stochastic Technological Diffusion Model

The following sections are included:

• Introduction

• Barro and Sala-i-Martin's Technological Diffusion Model

  • Descriptive properties of the model

  • Inadequacy of the model in describing economic development

• Interpretation and Enhancement of the Productivity Parameter

  • Productivity parameter and EGOIN theory

  • Endogeneity of productivity parameter A

  • Role of chance in the productivity parameter

  • Formulation of the productivity parameter

• The Stochastic Technological Diffusion Model

  • Setup of the model

  • Innovation in country 1

  • Imitation in country 2

    • Imitators of intermediate goods and producers of final goods

    • Representative consumer

  • Output of the economy

  • Growth rate of N₂

  • Expected growth rate of Y₂

  • The steady state

  • Technological leadership

• Result

• Conclusion