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Product-Variety, Population, Competition, and Growth

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  • Alberto Bucci

Abstract

This paper analyzes how population and product market competition (PMC) interact with each other in affecting productivity growth. We find that only a fully endogenous growth model with purposeful investment in human capital, an input in the production of intermediate goods, can simultaneously predict (as suggested by the available theoretical/empirical literature) that the relationships between population and economic growth rates and between PMC and economic growth are non-monotonic. The trade-off between specialization-gains and complexity-costs arising from an expansion of product-variety is crucial in determining the sign of these correlations, and the possible complementarity between two key variables in economic growth.

Suggested Citation

  • Alberto Bucci, 2011. "Product-Variety, Population, Competition, and Growth," DEGIT Conference Papers c016_006, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c016_006
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    File URL: http://degit.sam.sdu.dk/papers/degit_16/c016_006.pdf
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    References listed on IDEAS

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    1. 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.
    2. Avner Ahituv, 2001. "Be fruitful or multiply: On the interplay between fertility and economic development," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(1), pages 51-71.
    3. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    4. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012634.
    5. Bucci, Alberto, 2008. "Population growth in a model of economic growth with human capital accumulation and horizontal R&D," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1124-1147, September.
    6. Christopher Laincz & Pietro Peretto, 2006. "Scale effects in endogenous growth theory: an error of aggregation not specification," Journal of Economic Growth, Springer, vol. 11(3), pages 263-288, September.
    7. Alberto BUCCI, 2009. "Population, innovation, competition and growth with and without human capital investment," Departmental Working Papers 2009-46, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
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    Cited by:

    1. Dmitry Veselov, 2013. "Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents," HSE Working papers WP BRP 28/EC/2013, National Research University Higher School of Economics.
    2. Dmitry A. Veselov, 2015. "Democratization and Barriers to Entry in a Two-Dimensional Voting Model," Documents de travail du Centre d'Economie de la Sorbonne 15004, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    3. Vladimir Matveenkov, 2012. "Structure of Equilibria in a Model of Endogenous Growth with Horizontal Innovations," DEGIT Conference Papers c017_051, DEGIT, Dynamics, Economic Growth, and International Trade.

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    More about this item

    Keywords

    Endogenous and semi-endogenous growth; Population (size and growth); Human capital; Horizontal innovation; Scale effects; Monopolistic competition;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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