In this note, we analyze a stylized
creative region that is populated by members of the creative class. The
representative individual in this region possesses a constant relative risk
aversion (CRRA) utility function. The existing creative capital is used to
produce a final consumption good and to conduct R&D. We first derive the
equilibrium level of creative capital that is allocated to the R&D sector.
Next, we show how this level is affected by changes in the parameters and in
some of the model constants. Finally, we discuss the policy implications of our
comparative statics results.
Cite this paper
Batabyal, A. and Beladi, H. (2014) The Equilibrium Allocation of Creative Capital to R&D in a Dynamic Creative Region. Theoretical Economics Letters
, 425-430. doi: 10.4236/tel.2014.46054
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