Aghion–Howitt model

Aghion–Howitt model (also known as the quality ladder model) is a three-sector economic model of endogenous growth theory under monopolistic competition that demonstrates the possibility of sustained economic growth driven by behavioral factors. In the model, technological change is the result of purposeful activity by economic agents investing in new technologies to earn profit. The model made a significant contribution to understanding how individual decisions affect economic growth rates, as well as the reasons why poor countries cannot catch up to rich ones. It showed that economic growth can be accompanied by a conflict of interest among different economic agents, and that protecting the interests of existing producers in the market can hinder technological change and economic growth. The theory was developed in 1990 by Philippe Aghion and Peter Howitt and had earned its authors a Nobel Memorial Prize in Economic Sciences in 2025.

This article is issued from Wikipedia. The text is available under Creative Commons Attribution-Share Alike 4.0 unless otherwise noted. Additional terms may apply for the media files.