ENDOGENOUS GROWTH AND STRUCTURAL CHANGE THROUGH VERTICAL AND HORIZONTAL INNOVATIONS

This paper combines horizontal and vertical innovations to generate an endogenous growth model allowing for structural change as an endogenous phenomenon. Older technologies are continuously replaced by newer ones due to creative destruction, and new technologies appear as a result of horizontal innovations and due to the consumers' preference for variety. We assume fixed operational costs for the manufacturing sector and an endogenously defined patent price for every new technology. Every industry is profitable only for a limited period of time, making the effective time of existence of the technology endogenous and finite. We find that in such an economy endogenous structural change is the source of ongoing economic growth. Furthermore, the range of existing sectors as well as growth rates stays constant as long as the technologies are symmetric.

Love of Variety and Immigration

This paper develops a political-economic analysis of immigration in a host country that operates in a direct democracy regime. It shows that, in a monopolistic competitive environment with differentiated capital intensive goods, labor liberalization is more likely to come about in the societies that have more taste for variety. Moreover, in a host country with a strong preference for variety, workers and capital owners may share the same positive stance toward labor liberalization. It follows that the latter is impossible in a perfect competitive environment. Finally, in a dynamic inter-temporal setting with strategic voters, it demonstrates that the median voter is willing to accept fewer immigrants in the first period, in order to preserve her domestic political influence in the next period because of the naturalization of immigrants. In this way, the median voter maximizes her gains from immigration by accepting more immigrants in total.

Consumer Demand for Food Variety

This article briefly reviews the different theoretical approaches that are put forward to relate a preference for variety to an individual's purchasing and consumption behavior. This article reviews the existing empirical evidence on the demand for variety by discussing various ways to measure variety in food consumption. It focuses on preferences in explaining differences in individual behavior and introduces an additional approach to understanding consumers' demand for variety, which is based on the theory of household production. It summarizes a few stylized facts emanating from this literature on the impact of various demographic and socioeconomic characteristics of households and consumers on their demand for food variety. It finally addresses some issues that have been neglected in the economic analysis of the demand for food variety.