Technological distance, growth and scale effects

Journal Article (Journal Article)

We present an endogenous growth model in which the scale effect may be positive or negative but vanishes asymptotically. The mechanism behind this result provides a microfoundation for models that exploit the interaction of growth and market structure to remove the scale effect. When more firms are active, the economy is more specialised in that firms are less likely to work on related problems. This increase in technological distance reduces the spillovers between firms. A larger economy with more firms accumulates more knowledge. However, the spillovers that benefit a firm do not necessarily increase because of the differentiation of the knowledge stock.

Full Text

Duke Authors

Cited Authors

  • Peretto, P; Smulders, S

Published Date

  • January 1, 2002

Published In

Volume / Issue

  • 112 / 481

Start / End Page

  • 603 - 624

International Standard Serial Number (ISSN)

  • 0013-0133

Digital Object Identifier (DOI)

  • 10.1111/1468-0297.00732

Citation Source

  • Scopus