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Competiton And Growth In An Endogenous Growth Model With Expanding Product Variety Without Scale Effects Revisited

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  • Dominique BIANCO

Abstract

This paper shows that the results of Bianco (2006) depend critically on the assumption that there are no difference between the intermediate goods share in final output, the returns of specialization and the degree of market power of monopolistic competitors. In this paper, we disentangle the market power parameter from the intermediate goods share in final output and the returns to specialization. The main result of this paper is the death of the inverted-U shape relationship between competition and growth. Indeed, we find a decreasing relationship between competition and growth which is due to the composition of two negative effects on growth : resource allocation and Schumpeterian effects.

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Bibliographic Info

Article provided by Spiru Haret University, Faculty of Financial Management and Accounting Craiova in its journal Journal of Applied Economic Sciences.

Volume (Year): 4 (2009)
Issue (Month): 4(10)_Winter2009 ()
Pages: 502-508

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Handle: RePEc:ush:jaessh:v:4:y:2009:i:4(10)_winter2009:p:82

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Web page: http://www2.spiruharet.ro/facultati/facultate.php?id=14
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Keywords: endogenous growth; horizontal differentiation; technological change; imperfect competition.;

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  1. Dominique Bianco, 2007. "An Inverted U-Relationship between Product Market Competition and Growth in an Extended Romerian Model: A Comment," Rivista di Politica Economica, SIPI Spa, vol. 97(5), pages 245-258, September.
  2. Elias Dinopoulos & Peter Thompson, 1999. "Scale effects in Schumpeterian models of economic growth," Journal of Evolutionary Economics, Springer, vol. 9(2), pages 157-185.
  3. Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal Innovation in the Theory of Growth and Development," Working Papers 200, Barcelona Graduate School of Economics.
  4. Bianco, Dominique, 2007. "Competition and Growth in an Endogenous Growth Model with Expanding Product Variety without Scale Effects," MPRA Paper 6179, University Library of Munich, Germany, revised 08 Dec 2007.
  5. Dominique Bianco, 2006. "Competition and growth in endogenous growth model with expanding product variety without scale effects," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 49(3), pages 191-202.
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