%0 Journal Article %T The Equilibrium Allocation of Creative Capital to R&D in a Dynamic Creative Region %A Amitrajeet A. Batabyal %A Hamid Beladi %J Theoretical Economics Letters %P 425-430 %@ 2162-2086 %D 2014 %I Scientific Research Publishing %R 10.4236/tel.2014.46054 %X
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.