tag:blogger.com,1999:blog-3621026.post1215782809040952433..comments2024-03-28T10:25:22.825+01:00Comments on Robert's Stochastic thoughts: Costly R&D in a model of competitive equilibrium in which technology is completely non-excludableRoberthttp://www.blogger.com/profile/14455788499385673507noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-3621026.post-26107053146615467122015-06-21T21:34:58.237+02:002015-06-21T21:34:58.237+02:00You're describing commoditizing the complement...You're describing commoditizing the complement, a well known strategy used all the time in Silicon Valley. Microsoft did it to Netscape--give away the browser to help Windows. They also did it the hardware makers, for the same purpose. Google did/does it to Microsoft with Google Apps. Google also does it to Apple with Android. Apple does it with music and software. In general, everyone of note in the Valley is trying simultaneously to preserve/build their own monopolies, and undermine their rivals' monopolies by giving away their rivals' stuff for free.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3621026.post-89954752467286532022015-06-20T04:48:28.279+02:002015-06-20T04:48:28.279+02:00Robert,
Looks like we're thinking along the s...Robert,<br /><br />Looks like we're thinking along the same line, see my post here: http://andolfatto.blogspot.com/2015/06/competitive-innovation.html<br /><br />I'm not sure, however, what makes you think the model is "completely" unrealistic. To me, it seems to be capturing one important way in which knowledge transfer takes place. It's not the only way, of course. But its importance relative to other mechanisms is an empirical, not theoretical, question. David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-3621026.post-76239166245945148842015-06-19T17:32:14.278+02:002015-06-19T17:32:14.278+02:00You do understand perfectly. Especially the "...You do understand perfectly. Especially the "NOT d)" part. I am quite sure that this post has nothing to do with the real world (and wrote so in the post).<br /><br />It does go on to the "even more pointless model don't read this" in which the technology is usable by 10 people (not just one). Only one of them pays for the R&D in the Nash equilibrium.<br /><br />But both models are completely unrealistic -- efforts to to show that it is possible to write down a model in which etc not efforts to understand the real world.Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.comtag:blogger.com,1999:blog-3621026.post-65584461929503570782015-06-19T16:38:24.811+02:002015-06-19T16:38:24.811+02:00Trying to figure out what you've done here. M...Trying to figure out what you've done here. My impression:<br /><br />You have specified a model in which each technology is completely idiosyncratic, usable by only 1 individual. Something defined as an idea can improve only 1 of these idiosyncratic technologies, so although it is non-rivalrous (?), only 1 person can benefit from it. Consequently, it pays that person to develop the idea.<br /><br />Somewhere in all his "mathiness" posts, I recall Romer's objecting to models that obviously do not describe the world being treated as though they do. I suppose you can point out that you did not take this last step, and that your purpose in writing down this model was just to show that it is possible to write down a model in which <br /><br />a) rival goods received earn their marginal product<br />b) ideas are non-rival goods<br />c) it behooves people to devote resources to developing these ideas.<br /><br />NOT d) this model describes reality in some important way<br /><br />("Not d" because you did not go there).<br />Do I understand?marcel proustnoreply@blogger.com