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Innovation, competition, and growth: Schumpeterian ideas within a Hicksian framework

Author

Listed:
  • Jean-Luc Gaffard

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur, SKEMA Business School - SKEMA Business School)

Abstract

Schumpeter's ideas, which should be the basis of any evolutionary approach to the relations between innovation, competition and growth, are revisited and interpreted within the analytical framework proposed by Hicks in Capital and Time. Two main results emerge. First, the introduction of any new technology may lead to higher unemployment and reduced productivity; only an active monetary (and banking policy) will allow the economy to capture productivity gains. Second, within an industry confronted by recurrent technological changes, certain monopoly practices may be needed for this industry to converge towards an efficient market structure determined by the content of technology and the profile of demand. These results suggest some reconsideration of the macroeconomic and industrial or competition policies designed, in Europe, to cope with both technical change and globalization in modern economies.

Suggested Citation

  • Jean-Luc Gaffard, 2008. "Innovation, competition, and growth: Schumpeterian ideas within a Hicksian framework," SciencePo Working papers Main hal-03417065, HAL.
    • Handle: RePEc:hal:spmain:hal-03417065
    DOI: 10.1007/s00191-008-0102-z
    as

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    Keywords

    Competition; Creative destruction; Growth; Innovation; Market structure; Stabilisation; Volatility;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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