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Competition and Growth in an Endogenous Growth Model with Expanding Product Variety without Scale Effects

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  • Bianco, Dominique

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 an positive effect on growth. For large values of competition, we have a negative relationship between competition and growth.

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File URL: http://mpra.ub.uni-muenchen.de/6179/
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File URL: http://mpra.ub.uni-muenchen.de/9469/
File Function: revised version
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6179.

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Date of creation: 10 Nov 2007
Date of revision: 08 Dec 2007
Handle: RePEc:pra:mprapa:6179

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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.

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