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The Forum > Article Comments > Inside the black box: Paul Romer’s endogenous growth theory > Comments

Inside the black box: Paul Romer’s endogenous growth theory : Comments

By Flavio Romano, published 31/10/2018

Romer’s analysis begins with the insight that innovations are based on ideas and an intrinsic characteristic of ideas is that they are non-rivalrous.

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Quote*…The presence of increasing returns to scale, according to economic theory, indicates the presence of imperfect competition…*

IE questions the profit motive. A good jumping off point highlighting profiteering monopolies such as privatised power companies, overcharging consumers with little to no restraints from government regulations!

Quote*…Consequently, the market will tend to supply a less than socially optimal level, as markets tend to do with positive externalities, resulting in market failure…*

Except that doesn't happen necessarily, as the example of cheap badly engineered Chinese crap flooding the market, forcing success by lack of alternative, onto the consumer through profiteering retailers.

Quote*…Therefore, as the long run rate of economic growth depends on the rate at which innovation and knowledge grow, the public sector has a vital role to play in supplementing the private provision of research and education to correct this market failure…*

Demanding more resources for education at the expense of other more urgent investments into public health and housing.

Hillary Clinton for president…the author neglected to include those lines.
Posted by diver dan, Wednesday, 31 October 2018 9:13:26 AM
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