"Strategic Innovation, Spillovers, and Growth"
This paper develops a general equilibrium model of endogenous growth with strategic innovation and endogenous market structure. I extend the step-by-step quality ladder framework by introducing a CES demand system and fixed operating costs for intermediate-goods firms. Fixed costs generate endogenous operating thresholds such that, when technology gaps become sufficiently large, a duopoly market transitions into one with a monopolist and an outside firm. This endogenous duopoly boundary makes the persistence of distance to the frontier an equilibrium outcome rather than an assumption. Firms compete in prices and invest in R&D within a Markov-perfect equilibrium. Laggard firms receive spillovers that vary with the technology gap or with the leader's R&D effort, thereby making innovation incentives explicitly strategic. I show that duopolistic markets can be sustained without immediate catch-up or exit, generating persistent technology dispersion. The size of the gap itself shapes innovation incentives, a mechanism absent from standard macroeconomic growth models. Quantitatively, environments that sustain persistent distance from the frontier generate higher growth and welfare than either monopoly or neck-and-neck industries.
"Intermediate Goods Importation and the Innovation Effects on Growth"
This work-in-progress paper examines how trade frictions affect innovation incentives and long-run technological gaps between firms. Extending a spatial duopoly model with iceberg trade costs, the framework generates endogenous market power and price dispersion across firms. Because spatial frictions allow lagging firms to maintain a share of the market, innovation incentives differ from standard growth models where firms immediately exit once they fall behind. The model provides a mechanism through which trade barriers and market structure can influence technological catch-up across countries.