This paper models the telecommunications industry as the engine of economic growth in a general equilibrium framework. It assumes that telecom firms have market power and models intra-firm R&D that improves the productivity of telecom firms (or the quality of telecommunications
goods; e.g., the discovery and application of digital technologies). The theoretical framework of this paper also allows the telecom firms to engage in R&D partnerships and cross-licensing activities. The significance of such partnerships and activities is largely documented
for the telecommunications industry and other high-tech industries (see, for instance, Hagedoorn, 1993, 2002).
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