I would like to thank two anonymous referees as well as Raouf Boucekkine, Michelle Connally, Carl Davidson, Elias Dinopoulos, Paul Evans, Amy Glass, Gerhard Glomm, Douglas Hibbs, Chol-Won Li, Ulf Jakobsson, Enrique Mendoza, Pietro Peretto, Nancy Stokey, Masako Ueda, Jay Wilson, and Klaus Wälde for helpful comments. I gratefully acknowledge the financial support of the Wallander Foundation and the Research Institute of Industrial Economics (IUI). Please address correspondence to: Paul S. Segerstrom, Department of Economics, Stockholm School of Economics, Box 6501, 113 83 Stockholm, Sweden. E-mail: firstname.lastname@example.org.
Version of Record online: 13 FEB 2007
International Economic Review
Volume 48, Issue 1, pages 247–280, February 2007
How to Cite
Segerstrom, P. S. (2007), INTEL ECONOMICS. International Economic Review, 48: 247–280. doi: 10.1111/j.1468-2354.2007.00425.x
Manuscript received November 2002; revised August 2005.
- Issue online: 13 FEB 2007
- Version of Record online: 13 FEB 2007
This article presents an endogenous growth model that is designed to be roughly consistent with the experience of high-tech firms like Intel. In the model, industry leaders invest in R&D to improve their products, small firms invest in R&D to become industry leaders, and innovating becomes progressively more difficult over time. Consistent with the empirical evidence, the model implies that economic growth is independent of economy size and R&D intensity is independent of firm size. For plausible parameter values, it is optimal to heavily subsidize R&D activities.