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Horizontal Innovation-Based Growth and Product Market Competition

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  • Alberto Bucci

    (Department of Economics, Business and Statistics, University of Milan)

  • Carmelo Parello

    (Catholic University of Louvain)

Abstract

The influence of the degree of competition in the goods market on growth is analyzed by developing an endogenous growth model with horizontal innovation. Product market competition is measured by (1- Lerner index) and depends on both the share of factor inputs in total income and on the elasticity of substitution across goods. We find that the shape of the relationship between competition and growth can change dramatically according to which proxy of competition is used. We interpret our results in terms of the interplay between the resource allocation and the profit incentive effects.

Suggested Citation

  • Alberto Bucci & Carmelo Parello, 2006. "Horizontal Innovation-Based Growth and Product Market Competition," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1032, Universitá degli Studi di Milano.
  • Handle: RePEc:bep:unimip:unimi-1032
    Note: oai:cdlib1:unimi-1032
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    Cited by:

    1. Dominique Bianco, 2007. "An Inverted U-Relationship between Product Market Competition and Growth in an Extended Romerian Model: A Comment," Rivista di Politica Economica, SIPI Spa, vol. 97(5), pages 245-258, September.
    2. Bianco, Dominique, 2007. "R&D, Competition and Growth with Human Capital Accumulation : A Comment," MPRA Paper 5243, University Library of Munich, Germany.
    3. Ivan Savin & Peter Winker, 2012. "Heuristic Optimization Methods for Dynamic Panel Data Model Selection: Application on the Russian Innovative Performance," Computational Economics, Springer;Society for Computational Economics, vol. 39(4), pages 337-363, April.
    4. repec:eee:ecmode:v:70:y:2018:i:c:p:67-77 is not listed on IDEAS
    5. Onori, Daria, 2012. "Welfare, competition, specialization and growth," Research in Economics, Elsevier, vol. 66(4), pages 355-370.
    6. Min-Ren Yan, 2015. "Project-Based Market Competition and Policy Implications for Sustainable Developments in Building and Construction Sectors," Sustainability, MDPI, Open Access Journal, vol. 7(11), pages 1-26, November.
    7. Dominique Bianco, 2006. "Competition and growth in endogenous growth model with expanding product variety without scale effects," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 49(3), pages 191-202.
    8. Wang, Vey & Lai, Chung-Hui, 2011. "Franchise fee, competition and economic growth," Economic Modelling, Elsevier, vol. 28(5), pages 2090-2099, September.
    9. Alberto Bucci, 2009. "Population, Innovation, Competition and Growth with and without Human Capital Investment," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1095, Universitá degli Studi di Milano.
    10. Yılmaz, Ensar, 2013. "Competition, taxation and economic growth," Economic Modelling, Elsevier, vol. 35(C), pages 134-139.
    11. Alberto Bucci, 2014. "Population, competition, innovation, and economic growth with and without human capital investment," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(1), pages 61-84, April.

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