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Product variety, competition and economic growth

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  • Pier Saviotti

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  • Andreas Pyka

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Abstract

In this paper, we study the relationship between competition and economic growth using a model of economic development through the creation of new sectors. In our model, competition has both an intra- and an inter-sector component. We find that the best conditions for economic development are achieved when a suitable ratio of inter- to intra-sector competition is achieved. This ratio constitutes a compromise between providing a temporary monopoly to the first entrepreneur (low inter-sector competition) and creating enough imitation to expand the sector (intra-sector competition).
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Suggested Citation

  • Pier Saviotti & Andreas Pyka, 2008. "Product variety, competition and economic growth," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 323-347, August.
  • Handle: RePEc:spr:joevec:v:18:y:2008:i:3:p:323-347
    DOI: 10.1007/s00191-008-0097-5
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    More about this item

    Keywords

    Competition; Growth; Innovation; R&D; O; O3; O30;
    All these keywords.

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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