Strategic Interactions, Social Optimality and Growth
We focus on the implications of strategic interactions among research intensive firms on the rates of growth when the number of competing firms is small and firms recognise the effects their investment decisions have on the production behaviour of their rivals. Similar to other results, we find that the mode of oligopolist competition can have a great effect on the rate of growth, but we present novel channels of these effects. More importantly and unlike standard results, we show that for the Cournot type of competition, a (constrained) socially optimal rate of growth can be attained. On the other hand, this can never be achieved under the more severe Bertrand competition. These findings are thus parallel to the conclusions in strategic trade literature. Our results demonstrate that conclusions from the "strategic trade" literature are robust enough, if ex- tended into an explicitly dynamic general equilibrium framework. More importantly, though, they make evident that the questions of optimal policy design related to organisational structure and strategic conduct are tractable in the framework of endogenous growth models in sufficient detail.
|Date of creation:||Jul 2002|
|Contact details of provider:|| Postal: P.O. Box 882, Politickych veznu 7, 111 21 Praha 1|
Phone: (+420) 224 005 123
Fax: (+420) 224 005 333
Web page: http://www.cerge-ei.cz
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Neary, J.P., 1999.
"R&D in Developing Countries: What Should Governments Do?,"
99/27, College Dublin, Department of Political Economy-.
- J.P. Neary, 2000. "R&D in Developing Countries: What Should Governments Do?," CEP Discussion Papers dp0464, Centre for Economic Performance, LSE.
- J. Peter Neary, 1999. "R&D in developing countries : what should governments do?," Working Papers 199927, School of Economics, University College Dublin.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975.
"Monopolistic Competition and Optimum Product Diversity,"
The Warwick Economics Research Paper Series (TWERPS)
64, University of Warwick, Department of Economics.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
- Vencatachellum, Desire, 1998. "Endogenous growth with strategic interactions," Journal of Economic Dynamics and Control, Elsevier, vol. 23(2), pages 233-254, September.
- Baldwin, Richard E. & Forslid, Rikard, 1998. "Trade and growth Any unfinished business?," European Economic Review, Elsevier, vol. 42(3-5), pages 695-703, May.
- Paul M Romer, 1999.
"Endogenous Technological Change,"
Levine's Working Paper Archive
2135, David K. Levine.
- Brander, James A., 1995.
"Strategic trade policy,"
Handbook of International Economics,
in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455
- Smulders, J.A. & van de Klundert, T.C.M.J., 1995.
"Imperfect competition, concentration and growth with firm-specific R&D,"
Other publications TiSEM
3287368d-bf5d-421a-91c1-e, Tilburg University, School of Economics and Management.
- Smulders, Sjak & van de Klundert, Theo, 1995. "Imperfect competition, concentration and growth with firm-specific R & D," European Economic Review, Elsevier, vol. 39(1), pages 139-160, January.
- Romer, Paul M, 1990.
"Are Nonconvexities Important for Understanding Growth?,"
American Economic Review,
American Economic Association, vol. 80(2), pages 97-103, May.
- Paul Romer, 1990. "Are Nonconvexities Important For Understanding Growth?," NBER Working Papers 3271, National Bureau of Economic Research, Inc.
- Rivera-Batiz, Luis A. & Romer, Paul M., 1991.
"International trade with endogenous technological change,"
European Economic Review,
Elsevier, vol. 35(4), pages 971-1001, May.
- Luis A. Rivera-Batiz & Paul M. Romer, 1991. "International Trade with Endogenous Technological Change," NBER Working Papers 3594, National Bureau of Economic Research, Inc.
- Peretto, Pietro F., 1995.
"Sunk Costs, Market Structure, and Growth,"
95-34, Duke University, Department of Economics.
- van de Klundert, Theo & Smulders, Sjak, 1997. " Growth, Competition and Welfare," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 99-118, March.
When requesting a correction, please mention this item's handle: RePEc:cer:papers:wp199. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jana Koudelkova)
If references are entirely missing, you can add them using this form.