This concept was thought by its originator to function more effectively in an economy characterized by market power, since the returns to innovation would be higher, though this concept would not operate in such a setting if innovations are complementary with existing product lines.
This economic concept has been offered as an explanation for the divergence between supposed increasing employment volatility at the firm level and the Great Moderation, a reduction in the magnitude of business cycles. In "Endogenous Growth" models, this concept usually operates at the intensive margin, where firms choose their mode of production or R&amp;D budget, while this concept may also work through the extensive margin, in which the distribution of firm productivity changes due to entry and exit, giving rise to the "evolutionary" form of this concept. This concept was thought by its originator to function more effectively in an economy characterized by market power, since the returns to innovation would be higher, though this concept would not operate in such a setting if innovations are complementary with existing product lines. For 10 points, name this economic concept that holds that technological advance occurs through "gales" of resource reallocation, which is associated with Joseph Schumpeter.
This economic concept has been offered as an explanation for the divergence between supposed increasing employment volatility at the firm level and the Great Moderation, a reduction in the magnitude of business cycles.
creative destruction