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Competition And Economic Growth: A Critical Survey Of The Theoretical Literature

  • Alessandro D. SCOPELLITI

The paper examines the relationship between competition and economic growth, in the theoretical framework described by endogenous growth models, but with a specific interest in the policy implications. In this perspective, the key issue in the debate can be presented as follows: do competition policies always create the best conditions for promoting innovation and growth? Or do they also produce some disincentives for the investment decisions in R&D, such to limit the development of industries with higher innovation? In order to answer these questions, the paper presents a survey of the theoretical literature on competition and growth and it discusses the main models of endogenous growth, both the ones based on horizontal innovation, and the ones based on vertical innovation. In particular, specific attention is paid to the most recent models of Schumpeterian growth, which show the existence of a non-linear relationship between competition and growth, by considering either the initial degree of competition or the distance from the technological frontier. Finally, the review of the previous models of endogenous growth allows drawing some conclusions about further and possible developments of research on the relation between product market competition and economic growth.

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Article provided by Spiru Haret University, Faculty of Financial Management and Accounting Craiova in its journal Journal of Applied Economic Sciences.

Volume (Year): 5 (2010)
Issue (Month): 1(11)_Spring2010 ()
Pages: 70-93

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Handle: RePEc:ush:jaessh:v:5:y:2010:i:5(1)_spring2010:p:95
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  1. Alberto Bucci, 2003. "Market Power and Aggregate Economic Growth in Models with Endogenous Technological Change," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 62(2), pages 241-291, October.
  2. Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and Innovation: An Inverted U Relationship," NBER Working Papers 9269, National Bureau of Economic Research, Inc.
  3. 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.
  4. Roberto Cellini & Guido Cozzi, 2005. "Intellectual Property, Competition and Growth: An Introduction," Rivista di Politica Economica, SIPI Spa, vol. 95(5), pages 3-6, September.
  5. John Scott, 1984. "Firm versus Industry Variability in R&D Intensity," NBER Chapters, in: R&D, Patents, and Productivity, pages 233-248 National Bureau of Economic Research, Inc.
  6. Gancia, Gino & Zilibotti, Fabrizio, 2005. "Horizontal Innovation in the Theory of Growth and Development," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 3, pages 111-170 Elsevier.
  7. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006. "Distance to Frontier, Selection, and Economic Growth," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 37-74, 03.
  8. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-85, May.
  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. Marco, Alan C. & Rausser, Gordon C., 2007. "The Role of Patent Rights in Mergers: Consolidation in Plant Biotechnology," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2dk2x9hm, Department of Agricultural & Resource Economics, UC Berkeley.
  11. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  12. 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.
  13. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521816632, October.
  14. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  15. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-46, August.
  16. Bianco, Dominique, 2007. "An inverted-U relationship between product market competition and Growth in an extended romerian model : A comment," MPRA Paper 4492, University Library of Munich, Germany.
  17. An, Galina & Iyigun, Murat F., 2004. "The export skill content, learning by exporting and economic growth," Economics Letters, Elsevier, vol. 84(1), pages 29-34, July.
  18. Marco, Alan C. & Rausser, Gordon C., 2008. "AJAE Appendix: The Role of Patent Rights in Mergers: Consolidation in Plant Biotechnology," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 90(1), February.
  19. Crespo Jorge & Martín Carmela & Velázquez Francisco J, 2004. "The Role of International Technology Spillovers in the Economic Growth of the OECD Countries," Global Economy Journal, De Gruyter, vol. 4(2), pages 1-20, December.
  20. Blundell, Richard & Griffith, Rachel & van Reenen, John, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 529-54, July.
  21. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, October.
  22. Ben Gardiner & Ron Martin & Tyler Peter, 2004. "Competitiveness, Productivity and Economic Growth across the European Regions," ERSA conference papers ersa04p333, European Regional Science Association.
  23. repec:cdl:agrebk:297792 is not listed on IDEAS
  24. 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.
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