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Human capital, product market power and economic growth

Author

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  • Alberto BUCCI

Abstract

We build a generalised growth model of horizontal product innovation with human capital accumulation in which the monopolistic mark-up set in the uncompetitive sector and the degree of returns to specialization are disentangled. We find that product market power has a positive growth effect when durables are employed in the production of the homogeneous consumers good. Thus, in this case the model allows to replicate one of the main results of the neo-Schumpeterian growth theory within a framework where innovation is both horizontal and deterministic and economic growth is driven by private incentives to invest in education. We also find that not only the type of technology employed in the final output production, but also the intensity of the inter-sectoral competition for the same resource (human capital) affect both the steady state level of growth and the relationship between market power and economic development.

Suggested Citation

  • Alberto BUCCI, 2004. "Human capital, product market power and economic growth," Departmental Working Papers 2004-021, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2004-021
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    More about this item

    Keywords

    Human Capital; R&D; Product Market Power; Endogenous Growth;
    All these keywords.

    JEL classification:

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

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