HUMAN-CAPITAL, MARKET-STRUCTURE AND TAXATION IN A GROWTH-MODEL WITH ENDOGENOUS TECHNICAL PROGRESS

This paper provides a growth model with endogenous technical progress, the rate of which is neither parametrically fixed nor exploding. Its level depends on the allocation of capital and labor between educational and other purposes. If a perfect market for the use of technology exists, viability and optimality of perfect competition can be ensured through lump-sum taxes. If there is no market for the use of technology, an externality arises for which a tax subsidy system is derived that influences the rate of technical progress and allows for first best growth and a balanced government budget simultaneously. © 1991.