IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth

Listed author(s):
  • Carlin, Wendy
  • Schaffer, Mark E
  • Seabright, Paul

This Paper examines the importance of competition in the growth and development of firms. We make use of the large-scale natural experiment of the shift from an economic system without competition to a market economy to shed light on the factors that influence innovation by firms and their subsequent growth. Our data come from a survey of nearly 4,000 firms in 24 transition countries. These data have three main advantages. First, while in a market economy firms face widely divergent needs and opportunities for innovation, virtually every firm that emerged from central planning was maladapted to the new environment, and needed to innovate at least modestly in order to survive. Second, we measure directly the degree of competition perceived by each firm in its principal market rather than attempting to infer this from market data collected by statistical agencies; and we collect data directly on various measures of innovative activity. Third, the fact that transition countries inherited market structures from a regime in which selection and incentive effects of competition were not operational and were then subjected to a dramatic shock to competition mitigates some of the endogeneity problems associated with measures of competition in market economies. We find evidence of the importance of a minimum of rivalry in both innovation and growth: the presence of at least a few competitors is effective both directly and through improving the efficiency with which the rents from market power in product markets are utilised to undertake innovation. There is also some less clear-cut evidence that the presence of a few rivals is more conducive to performance than the presence of many competitors.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=4343
Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4343.

as
in new window

Length:
Date of creation: Apr 2004
Handle: RePEc:cpr:ceprdp:4343
Contact details of provider: Postal:
Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.

Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820

Order Information: Email:


References listed on IDEAS
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.:

as
in new window


  1. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
  2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
  3. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
  4. repec:adr:anecst:y:1994:i:34 is not listed on IDEAS
  5. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
  6. Jerry Hausman & Gregory Leonard & J. Douglas Zona, 1994. "Competitive Analysis with Differentiated Products," Annals of Economics and Statistics, GENES, issue 34, pages 143-157.
  7. repec:adr:anecst:y:1994:i:34:p:06 is not listed on IDEAS
  8. Simon Johnson & John McMillan & Christopher Woodruff, 2002. "Property Rights and Finance," American Economic Review, American Economic Association, vol. 92(5), pages 1335-1356, December.
  9. Philippe Aghion & Mathias Dewatripont & Patrick Rey, 1999. "Competition, Financial Discipline and Growth," Review of Economic Studies, Oxford University Press, vol. 66(4), pages 825-852.
  10. Anonymous, 2000. "Agricultural Economics Volumes 1-22, 1986-2000," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 23(2), August.
  11. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Sep.
  12. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
  13. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27984, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  14. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Nov.
  15. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Feb.
  16. Fuller, Wayne A, 1977. "Some Properties of a Modification of the Limited Information Estimator," Econometrica, Econometric Society, vol. 45(4), pages 939-953, May.
  17. N/A, 2000. "Section I. Recent economic developments," National Institute Economic Review, National Institute of Economic and Social Research, vol. 174(1), pages 30-37, October.
  18. Wendy Carlin & Jonathan Haskel & Paul Seabright, 2001. "Understanding ‘The Essential Fact about Capitalism’: Markets, Competition and Creative Destruction," National Institute Economic Review, National Institute of Economic and Social Research, vol. 175(1), pages 67-84, January.
  19. anonymous, 2000. "Reviewing economic development needs," Banking and Community Perspectives, Federal Reserve Bank of Dallas, issue 2, pages 6-7.
  20. Ng, Charles K & Seabright, Paul, 2001. "Competition, Privatisation and Productive Efficiency: Evidence from the Airline Industry," Economic Journal, Royal Economic Society, vol. 111(473), pages 591-619, July.
  21. Marjolein C.J. Caniëls, 2000. "Knowledge Spillovers and Economic Growth," Books, Edward Elgar Publishing, number 1936.
  22. N/A, 2000. "The world economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 173(1), pages 3-3, July.
  23. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
  24. -, 2000. "Economic survey of Canada, 1999," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 28797, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  25. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27985, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  26. N/A, 2000. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 173(1), pages 43-65, July.
  27. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27986, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  28. repec:ecr:col114:28022 is not listed on IDEAS
  29. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Aug.
  30. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27987, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  31. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
  32. N/A, 2000. "The world economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 174(1), pages 3-3, October.
  33. Anonymous, 2000. "Microeconomic Reform and the Environment," Conference/Workshop Proceedings 31908, Productivity Commission.
  34. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Jun.
  35. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27992, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  36. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27990, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  37. Philippe Aghion & Christopher Harris & Peter Howitt & John Vickers, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Oxford University Press, vol. 68(3), pages 467-492.
  38. N/A, 2000. "At a Glance ... The UK economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 173(1), pages 2-2, July.
  39. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Mar.
  40. -, 2000. "Global economic developments, 1999," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 27471, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  41. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
  42. ., 2000. "Inflation and economic performance," Chapters, in: Macroeconomic Instability and Coordination, chapter 8 Edward Elgar Publishing.
  43. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27988, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  44. Carlin, Wendy & Fries, Steven & Schaffer, Mark E & Seabright, Paul, 2001. "Competition and Enterprise Performance in Transition Economies: Evidence from a Cross-country Survey," CEPR Discussion Papers 2840, C.E.P.R. Discussion Papers.
  45. anonymous, 2000. "Twelfth District economic update," Western economic developments, Federal Reserve Bank of San Francisco, issue Dec, pages 1-5.
  46. N/A, 2000. "The world economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 172(1), pages 3-3, April.
  47. -, 2000. "Economic survey of United States, 1999," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 28796, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  48. ., 2000. "Ideology and analysis in macroeconomics," Chapters, in: Macroeconomic Instability and Coordination, chapter 18 Edward Elgar Publishing.
  49. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27991, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  50. -, 2000. "Meeting held on engendering macroeconomic policy," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 2, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  51. anonymous, 2000. "Strengthening the emerging market economies," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 44(Jun), pages 228-231.
  52. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue May.
  53. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
  54. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27983, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  55. Grosfeld, Irena & Tressel, Thierry, 2001. "Competition, Corporate Governance: Substitutes or Complements? Evidence from the Warsaw Stock Exchange," CEPR Discussion Papers 2888, C.E.P.R. Discussion Papers.
  56. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 529-554.
  57. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
  58. 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.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:4343. 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: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.