Growth with Vertical Capital Productivity Deepening

We developed a growth model driven by continuous capital productivity deepening. The monopoly engaged in capital productivity research can achieve steadily increasing equilibrium profits over time, provided that the productivity of automation capital consistently improves and the labour supply grows at a constant rate. The rising capital income share can be explained by the degree of automation in capital productivity research and the final good production. Under exogenous saving, the growth rate of the economy is increasing in the degree of automation in research and the task production.