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Spillovers and the competitive pressure for long-run innovation

  • Reis, Ana Balcão
  • Traca, Daniel A.

This paper discusses the impact of oligopolistic product markets for innovation and growth, highlighting a novel, fundamental role of spillovers. We develop a model of endogenous growth with non-tournament R&D, where spillovers raise the relative R&D efficiency of laggards. A key feature is that the rate of innovation and the market configuration (i.e. the distribution of market shares) are jointly determined. Our results emphasize the role of spillovers in sustaining the competitive pressure that is fundamental for long-run innovation and economic growth.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 52 (2008)
Issue (Month): 4 (May)
Pages: 589-610

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Handle: RePEc:eee:eecrev:v:52:y:2008:i:4:p:589-610
Contact details of provider: Web page: http://www.elsevier.com/locate/eer

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  1. Claude d'Aspremont & Rodolphe Dos Santos Ferreira & Louis-André Gérard-Varet, 2010. "Strategic R&D investment, competitive toughness and growth," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(3), pages 273-295.
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  9. Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
  10. Peretto, Pietro F., 1995. "Sunk Costs, Market Structure, and Growth," Working Papers 95-34, Duke University, Department of Economics.
  11. Encaoua, D. & Ulph, D., 2000. "Catching-up or Leapfrogging ? The Effects of Competition on Innovation and Growth," Papiers d'Economie Mathématique et Applications 2000.97, Université Panthéon-Sorbonne (Paris 1).
  12. Daniel Traca, 2001. "Quantitative restrictions, market power and productivity growth," ULB Institutional Repository 2013/9235, ULB -- Universite Libre de Bruxelles.
  13. Sergio Rebelo, 1999. "Long Run Policy Analysis and Long Run Growth," Levine's Working Paper Archive 2114, David K. Levine.
  14. Peretto, Pietro F., 1996. "Firm Size, Rivalry and the Extent of the Market in Endogenous Technological Change," Working Papers 96-07, Duke University, Department of Economics.
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  16. Harris, Christopher & Howitt, Peter & Vickers, John & Aghion, Philippe, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Scholarly Articles 12375013, Harvard University Department of Economics.
  17. Peretto, Pietro F, 1998. " Technological Change, Market Rivalry, and the Evolution of the Capitalist Engine of Growth," Journal of Economic Growth, Springer, vol. 3(1), pages 53-80, March.
  18. Vencatachellum, Desire, 1998. "Endogenous growth with strategic interactions," Journal of Economic Dynamics and Control, Elsevier, vol. 23(2), pages 233-254, September.
  19. Peretto, Pietro F., 1999. "Cost reduction, entry, and the interdependence of market structure and economic growth," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 173-195, February.
  20. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-93, June.
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