Robustness to relaxing the small-research-sector assumption

Establish whether relaxing Assumption 2—removing the small-research-sector assumption and solving for the wage as a general equilibrium object jointly determined by the research and intermediate sectors—alters the qualitative results of the model.

Background

To simplify the balanced growth path analysis, the model assumes the research sector is small relative to the production sector so that wages are determined solely by the intermediate-good sector. This tractability assumption avoids solving a full general equilibrium wage determination.

The authors explicitly conjecture that relaxing this assumption would not change qualitative results, leaving open the task of proving the robustness of their conclusions to a full general equilibrium setting.

References

Relaxing this assumption would require solving for the wage as a general equilibrium object jointly determined by both sectors, significantly complicating the analysis without, we conjecture, altering the qualitative results.

— Bridging Distant Ideas: the Impact of AI on R&D and Recombinant Innovation  (2604.02189 - Bazzichi et al., 2 Apr 2026) in Assumption 2, Section 4.1 (Balanced Growth Path Equilibrium)