Document Type
Discussion Paper
Publication Date
3-1-2011
CFDP Number
1786
CFDP Revision Date
2011-08-01
CFDP Pages
30
Abstract
Modifying a parallel dynamic programming approach to a simple deterministic economy, we consider the effect of an innovation in the means of production. The success of the innovation is assumed to depend on the availability of financing, locus of financial control, the amount of resources invested, and on a random event. The relationship between money and physical assets is critical. In this first part stress is laid on the innovation behavior of Robinson Crusoe in a premonetary economy, then on his actions in a monetary economy in partial equilibrium. Part 2 considers the closed monetary economy with several differentiated agents.
Recommended Citation
Shubik, Martin and Sudderth, William D., "Cost Innovation: Schumpeter and Equilibrium. Part 1. Robinson Crusoe" (2011). Cowles Foundation Discussion Papers. 2127.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2127