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Market Structure and the Growth Process


  • Philippe Aghion

    (University College London)

  • Peter Howitt

    (Ohio State University)


Recent empirical work has pointed to a positive correlation between product market competition and productivity growth. In this lecture we try to reconcile this evidence with the Schumpterian growth paradigm. Three alternative explanations are successively considered, respectively based upon agency considerations, the tacit nature of knowledge, and the decomposition of R and D activities into research and development. (Copyright: Elsevier)

Suggested Citation

  • Philippe Aghion & Peter Howitt, 1998. "Market Structure and the Growth Process," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 276-305, January.
  • Handle: RePEc:red:issued:v:1:y:1998:i:1:p:276-305
    DOI: 10.1006/redy.1997.0007

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    References listed on IDEAS

    1. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters,in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86 National Bureau of Economic Research, Inc.
    2. 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.
    3. Philippe Aghion & Mathias Dewatripont & Patrick Rey, 1999. "Competition, Financial Discipline and Growth," Review of Economic Studies, Oxford University Press, vol. 66(4), pages 825-852.
    4. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    5. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    6. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-1091, December.
    7. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    8. Aghion, Philippe & Howitt, Peter, 1996. "Research and Development in the Growth Process," Journal of Economic Growth, Springer, vol. 1(1), pages 49-73, March.
    9. Philippe Aghion & Peter Howitt, 1997. "Endogenous Growth Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011662, January.
    10. 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.
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    Cited by:

    1. Bucci, Alberto & Parello, Carmelo Pierpaolo, 2009. "Horizontal innovation-based growth and product market competition," Economic Modelling, Elsevier, vol. 26(1), pages 213-221, January.
    2. Alberto Bucci, 2003. "R&D, Imperfect Competition and Growth with Human Capital Accumulation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 417-439, September.
    3. Alberto Bucci & Fabio Fiorillo & Stefano Staffolani, 2003. "Can Market Power Influence Employment, Wage Inequality and Growth?," Metroeconomica, Wiley Blackwell, vol. 54(2-3), pages 129-160, May.
    4. Davide Fantino, 2008. "R&D and market structure in a horizontal differentiation framework," Temi di discussione (Economic working papers) 658, Bank of Italy, Economic Research and International Relations Area.
    5. Jose E. Galdon Sanchez & James A. Schmitz, 1999. "Threats to industry survival and labor productivity: world iron-ore markets in the 1980's," Staff Report 263, Federal Reserve Bank of Minneapolis.
    6. Inchausti-Sintes, Federico, 2015. "Tourism: Economic growth, employment and Dutch Disease," Annals of Tourism Research, Elsevier, vol. 54(C), pages 172-189.
    7. Simplice Asongu & Ndemaze Asongu, 2017. "The role of mobile phones in governance-driven technology exports in Sub-Saharan Africa," Working Papers 17/036, African Governance and Development Institute..
    8. Minniti, Antonio, 2010. "Product market competition, R&D composition and growth," Economic Modelling, Elsevier, vol. 27(1), pages 417-421, January.
    9. Alberto Bucci, 2005. "Human capital, product market power and economic growth," Chapters,in: Innovation, Unemployment and Policy in the Theories of Growth and Distribution, chapter 1 Edward Elgar Publishing.
    10. Alberto Bucci, 2005. "An Inverted-U Relationship between Product Market Competition and Growth in an Extended Romerian Model," Rivista di Politica Economica, SIPI Spa, vol. 95(5), pages 177-206, September.
    11. Man, Georg, 2014. "Political competition and economic growth: A nonlinear relationship?," European Journal of Political Economy, Elsevier, vol. 36(C), pages 287-302.
    12. Pier Paolo Patrucco, 2003. "Institutional Variety, Networking and Knowledge Exchange: Communication and Innovation in the Case of the Brianza Technological District," Regional Studies, Taylor & Francis Journals, vol. 37(2), pages 159-172.
    13. Asongu, Simplice & Biekpe, Nicholas, 2017. "Mobile Phone Innovation and Entrepreneurship in Sub-Saharan Africa," MPRA Paper 81703, University Library of Munich, Germany.
    14. Nabil Abou Lebdi & Katrin Hussinger, 2016. "Startup Innovation during the Past Economic Crisis," CREA Discussion Paper Series 16-27, Center for Research in Economic Analysis, University of Luxembourg.
    15. Philip Kostov & John Lingard, 2004. "Block-diagonal representation of a dualistic agricultural economy and its application in formal modelling: the case of Bulgaria," Computational Economics 0409001, EconWPA.
    16. Alberto BUCCI, 2002. "Market Power, Human Capital and Growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    17. Furceri, Davide & Karras, Georgios, 2007. "Country size and business cycle volatility: Scale really matters," Journal of the Japanese and International Economies, Elsevier, vol. 21(4), pages 424-434, December.
    18. Gros, Daniel & Alcidi, Cinzia, 2014. "The Global Economy in 2030: Trends and Strategies for Europe," CEPS Papers 9142, Centre for European Policy Studies.
    19. Canton, Erik J. F. & de Groot, Henri L. F. & Nahuis, Richard, 2002. "Vested interests, population ageing and technology adoption," European Journal of Political Economy, Elsevier, vol. 18(4), pages 631-652, November.
    20. Silva, Mario, 2017. "New monetarism with endogenous product variety and monopolistic competition," Journal of Economic Dynamics and Control, Elsevier, vol. 75(C), pages 158-181.

    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • D4 - Microeconomics - - Market Structure, Pricing, and Design


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