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Corporate governance, competition policy and industrial policy

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  • Aghion, Ph.
  • Dewatripont, M.
  • Rey, P.

Abstract

This paper shows that introducing agency considerations into a model of innovations and growth can have radical consequences as to the effects of competition policy and industrial policy on the rate of technological change. Whilst competition policy (resp. industrial policy) has a negative (resp. a positive) effect on growth in a Schumpeterian model with profit-maximising firms, these effects are shown to be both reversed when agency problems within innovating firms become sufficiently important. © 1997 Elsevier Science B.V.
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  • Aghion, Ph. & Dewatripont, M. & Rey, P., 1997. "Corporate governance, competition policy and industrial policy," European Economic Review, Elsevier, vol. 41(3-5), pages 797-805, April.
  • Handle: RePEc:eee:eecrev:v:41:y:1997:i:3-5:p:797-805
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    1. Blundell, Richard & Griffith, Rachel & Van Reenen, John, 1995. "Dynamic Count Data Models of Technological Innovation," Economic Journal, Royal Economic Society, vol. 105(429), pages 333-344, March.
    2. Mayer, Colin, 1988. "New issues in corporate finance," European Economic Review, Elsevier, vol. 32(5), pages 1167-1183, June.
    3. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    4. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    5. Nickell, Stephen & Nicolitsas, Daphne & Dryden, Neil, 1997. "What makes firms perform well?," European Economic Review, Elsevier, vol. 41(3-5), pages 783-796, April.
    6. Aghion, Philippe & Howitt, Peter, 1996. "Research and Development in the Growth Process," Journal of Economic Growth, Springer, vol. 1(1), pages 49-73, March.
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