TITLE:
Reconciling Micro- and Macroeconomics: The Interaction of Innovations, Imitations and Personal Income Distribution
AUTHORS:
Friedrich L. Sell
KEYWORDS:
Innovation, Imitation, Personal Income Distribution, Modeling of the Business Cycle Based on Microeconomic Foundation
JOURNAL NAME:
Modern Economy,
Vol.11 No.5,
May
9,
2020
ABSTRACT: The paper is a successor of original papers
presented previously by Blümle (1989) and Sell (2020). Drawing on insights provided already by Enrico Barone in the 1930’s, we
establish a relationship between the distribution of personal incomes and the
activities of innovation and imitation. The model we set up may be taken both
as a microeconomic and/or a macroeconomic contribution. On the micro level,
champion firms like Google, Amazon, Microsoft or Facebook generate fabulous
innovations which are accompanied by large profits and, at the same time, an
intra-firm concentration of wages and salaries (including bonuses). On the
macro level, the upper (lower) swing of the business cycle goes hand in hand
with a rising (falling) profit quota/a higher (lower) inter-firm slope of
earnings, created to a large extent by innovative Schumpeterian monopolists (imitative
entrepreneurs). Finally, we want to find some empirical evidence for our
theoretical results. The work concludes with a summary of our exposition along
with some thoughts about policy implications.