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Competition and Growth: Reinterpreting their Relationship

  • Daria Onori

    (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université, IRES - UCL - Université Catholique de Louvain, Departement of Economics and Law, Faculty of Economics - Università degli Studi di Roma "La Sapienza" [Rome])

In this paper we modify a standard quality ladder model by assuming that R&D is driven by outsider firms and the winners of the race sell licenses over their patents, instead of entering directly the intermediate good sector. As a reward they get the aggregate profit of the industry. Moreover, in the intermediate good sector firms compete à la Cournot and it is assumed that there are spillovers represented by strategic complementarities on costs. We prove that there exists an interval of values of the spillover parameter such that the relationship between competition and growth is an inverted-U-shape.

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Handle: RePEc:hal:wpaper:halshs-00806994
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