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Competition and Growth: Reinterpreting their Relationship

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  • Daria Onori

    () (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS; Université catholique de Louvain, IRES; University of Rome “La Sapienza”, Departement of Economics and Law, Faculty of Economics)

Abstract

In this paper we modify a standard quality ladder model by assuming that R&D is driven by outsider firms and the winners of the race sell licenses over their patents, instead of entering directly the intermediate good sector. As a reward they get the aggregate profit of the industry. Moreover, in the intermediate good sector firms compete à la Cournot and it is assumed that there are spillovers represented by strategic complementarities on costs. We prove that there exists an interval of values of the spillover parameter such that the relationship between competition and growth is an inverted-U-shape.

Suggested Citation

  • Daria Onori, 2013. "Competition and Growth: Reinterpreting their Relationship," AMSE Working Papers 1324, Aix-Marseille School of Economics, Marseille, France.
  • Handle: RePEc:aim:wpaimx:1324
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    Cited by:

    1. Nikolay Chernyshev, 2017. "The Relationship between R&D and Competition: Reconciling Theory and Evidence," CDMA Working Paper Series 201704, Centre for Dynamic Macroeconomic Analysis.
    2. Onori, Daria, 2012. "Welfare, competition, specialization and growth," Research in Economics, Elsevier, vol. 66(4), pages 355-370.
    3. Raul V. Fabella, 2017. "Competition, Regulation and Institutional Quality," UP School of Economics Discussion Papers 201701, University of the Philippines School of Economics.

    More about this item

    Keywords

    quality ladder; Cournot oligopoly; strategic complementarities; competition;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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