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Does the “New Economy” Change the Frontiers of the Large Corporation?

Author

Listed:
  • Bruno AMABLE

    (University of Paris X, MODEM and CEPREMAP)

  • Régis BRETON

    (University of Paris X, FORUM)

  • Xavier RAGOT

    (CEPREMAP)

Abstract

This paper proposes a model of industrial innovation linked to financial liberalisation where agents are characterised by heterogeneous innovative abilities. Individual researchers may either be employed by a large firm and work together on the firm's innovative project, or they may alternatively set up an individual firm in order to commercialise their own innovation. The large firm's hiring decisions and the individual researcher's décision to set up his own firm depends on the researcher's innovative ability and on the financial conditions. Financial liberalisation leading to a lower cost of setting up a small firm will affect the size of the large firm and increase the number of small technology firms. A drop in the cost of starting a small firm may increase income inequality.

Suggested Citation

  • Bruno AMABLE & Régis BRETON & Xavier RAGOT, 2002. "Does the “New Economy” Change the Frontiers of the Large Corporation?," Discussion Papers (REL - Recherches Economiques de Louvain) 2002029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:2002029
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    File URL: http://sites.uclouvain.be/econ/DP/REL/2002029.pdf
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    References listed on IDEAS

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    1. Mitchell Berlin, 1998. "That thing venture capitalist do," Business Review, Federal Reserve Bank of Philadelphia, issue Jan, pages 15-26.
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    2. Paul J. Zak, 2002. "Institutions, Property Rights, and Growth," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 55-73.
    3. Bruno Amable & Pascal Petit, 2003. "The diversity of social systems of innovation and production during the 1990s," Chapters, in: Jean-Philippe Touffut (ed.), Institutions, Innovation and Growth, chapter 8, Edward Elgar Publishing.
    4. Paul J. ZAK, 2002. "Institutions, Property Rights and Growth," Discussion Papers (REL - Recherches Economiques de Louvain) 2002014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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    Keywords

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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