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Competition and growth in endogenous growth model with expanding product variety without scale effects

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  • Dominique Bianco

Abstract

The aim of this paper is to analyse the relationship between competition and growth in an endogenous growth model with expanding product variety without scale effect. In order to do this, we develop an extension of the Bucci (2005) model in which we eliminate the scale effects. We find that the relationship between competition and growth is always inverted U shaped. We explain this result by the composition of two effects on growth: resource allocation and profit incentive effects. For low values of product market competition, an increase of competition has a positive effect on growth. For large values of competition, we have a negative relationship between competition and growth.

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File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/13224/1/ber-1107.pdf
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Bibliographic Info

Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

Volume (Year): 49 (2006)
Issue (Month): 3 ()
Pages: 191-202

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Handle: RePEc:bxr:bxrceb:y:2006:v:49:i:3:p:191-202

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Related research

Keywords: Endogenous Growth; Horizontal Differentiation; Technological Change; Imperfect Competition;

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Cited by:
  1. Bianco, Dominique, 2009. "Competition and Growth in an Endogenous Growth Model with Expanding product Variety without Scale Effects Revisited," MPRA Paper 16670, University Library of Munich, Germany.
  2. Bianco, Dominique, 2007. "An inverted-U relationship between product market competition and Growth in an extended romerian model : A comment," MPRA Paper 4492, University Library of Munich, Germany.
  3. Bianco, Dominique, 2008. "Growth and Competition in a Model of Human Capital Accumulation and Research," MPRA Paper 10913, University Library of Munich, Germany.
  4. Wang, Vey & Lai, Chung-Hui, 2011. "Franchise fee, competition and economic growth," Economic Modelling, Elsevier, vol. 28(5), pages 2090-2099, September.

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