The Equilibrium Allocation of Creative Capital to R&D in a Dynamic Creative Region

Amitrajeet A. Batabyal, Hamid Beladi

Department of Economics, Rochester Institute of Technology, Rochester, USA.
Departmentof Economics, University of Texas, San Antonio, USA.

DOI: 10.4236/tel.[phone]                

Abstract

In this note, we analyze a stylized creative region that is populated by members of the creative class. The representative individual in this region possesses a constant relative risk aversion (CRRA) utility function. The existing creative capital is used to produce a final consumption good and to conduct R&D. We first derive the equilibrium level of creative capital that is allocated to the R&D sector. Next, we show how this level is affected by changes in the parameters and in some of the model constants. Finally, we discuss the policy implications of our comparative statics results.

Keywords

Creative Capital, Creative Class, Dynamics, Economic Growth, R&D

Conflicts of Interest

The authors declare no conflicts of interest.

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