Endogenous Growth: Fragile Foundations?

The Frankel, Romer and Lucas theories of endogenous growth rest on the assumptions of knowledge‐based externalities and price‐taking representative agents. It is argued that, in a context of long‐run growth, these assumptions are mutually incompatible, that representative agents will cooperate to internalize the externalities and will cease to be price takers, and that, therefore, the relevance of theories based on those assumptions must be questioned.