This paper analyzes equilibrium, dynamics, and optimal decisions on the factor bias of innovation in a model of induced … innovation. In a model with full employment, we show that (a) if the elasticity of substitution is always less than or greater …, there will be a bias towards excessive labor augmenting innovation, resulting in too high unemployment, with convergence to …

innovation. After identifying pervasive market failures in innovation, it explains why those associated with the Nordic model may … be particularly conducive to innovation, and demonstrates that, in general, the optimal policies of the leader should … industrial policies, public investments, and systems of social protection), not only leading to more innovation, but ensuring …