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Competition and Increasing Returns


  • Amendola Mario

    () (University of Roma La Sapienza, Dipartimento di Economia, Piazzale Aldo Moro, 5, 00185 Roma, Box 83 Roma 62, Italy)

  • Gaffard Jean-Luc

    () (OFCE, SKEMA Business School, 60 rue Dostoïevski, 06902 Sophia Antipolis Cedex, French)


The paper demonstrates the compatibility between competition as a rivalry among firms and increasing returns resulting from innovative choice. The analysis offers the prospect of a general theory of economic evolution. It is carried out by means of a model, which makes it possible to exhibit the time structure of production processes and to sketch out the sequential interaction of decisions in a process of restructuring of productive capacities for the whole economy. It shows that several firms can coexist in the market, despite the existence of increasing returns, yet remain differentiated not so much because they supply differentiated goods, but because they are each one at a different stage of the life cycle of the production process.

Suggested Citation

  • Amendola Mario & Gaffard Jean-Luc, 2014. "Competition and Increasing Returns," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 257-273, April.
  • Handle: RePEc:jns:jbstat:v:234:y:2014:i:2-3:p:257-273

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    References listed on IDEAS

    1. Hicks, John, 2017. "A Market Theory of Money," OUP Catalogue, Oxford University Press, number 9780198796237, June.
    2. G. B. Richardson, 1998. "The Economics of Imperfect Knowledge," Books, Edward Elgar Publishing, number 1524.
    3. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804, June.
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    More about this item


    Competition; increasing returns; time to build; viability;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives


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