Taste for variety: Model of Grossman and Helpman.

Variety expansionThe ModelResearch sector◮ Resources devoted to research generate blueprints;◮ These blueprints expand the measure of differentiatedproducts;◮ Research is made by private, profit maximizing entrepreneurs;◮ Their profit is th fraction of profits of oligopolies producingthe newly invented middle product:◮ They receive indefinite patent protection;◮ Blueprints are not tradable, thus all varieties have to beproduced in the country of origin;◮ There is the free entry of new entrepreneurs into the R&Dsector in any country.