The difference is that once the marginal cost is spent, the information
can be used over and over. A machine cannot do the same thing.
On Thu, Feb 15, 2001 at 05:32:02PM -0500, [EMAIL PROTECTED] wrote:
> I've never understood, given a certain set of assumptions, why endogenous growth
>theory was more satisfactory than neoclassical theory. In the textbooks I've read,
>the difference comes down to the role of technology (NCt doesn't really explain why
>this is the limit of growth, or where it comes from, but okay) and diminishing
>returns on capital investment. Was endogenous growth theory just made up to answer
>the question about statistical correlations between savings and growth? Or was there
>a better reason?
>
> Even if the marginal cost of info is nothing, the marginal cost of producing
>anything by using information (even profit in financial markets) is not zero, and so
>you're basically back to Solow's model, it would seem.
>
>
> Christian
>
> >I have never been able to figure out why Romer's work has made such a
> >buzz. The only thing different between his an Solow's is that he
> >emphasizes that the supposed key source of growth has no marginal cost. Whereas
>Solow's idea of growth would be technology embodied in machines, Romer's is
>information, which can be infinitely re-used.
>
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
