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Competition and Economic Growth: a Critical Survey of the Theoretical Literature

  • Scopelliti, Alessandro Diego

The paper examines the relationship between competition and economic growth, in the theoretical framework described by endogenous growth models, but with a specific interest in the policy implications. In this perspective, the key issue in the debate can be presented as follows: do competition policies always create the best conditions for promoting innovation and growth? Or do they also produce some disincentives for the investment decisions in R&D, such to limit the development of industries with higher innovation? In order to answer these questions, the paper presents a survey of the theoretical literature on competition and growth and it discusses the main models of endogenous growth, both the ones based on horizontal innovation, such as Romer (1990) or Rivera-Batiz and Romer (1991), and the ones based on vertical innovation, like Aghion and Howitt (1992) or Aghion, Dewatripont and Rey (1997). In particular, specific attention is paid to the most recent models of Schumpeterian growth, which show the existence of a non-linear relationship between competition and growth, by considering either the initial degree of competition (Aghion, Blundell, Bloom, Griffith and Howitt, 2005) or the distance from the technological frontier. (Acemoglu, Aghion and Zilibotti, 2006). Finally, the review of the previous models of endogenous growth allows to draw some conclusions about further and possible developments of research on the relation between product market competition and economic growth.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20079.

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Date of creation: 10 Dec 2009
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Handle: RePEc:pra:mprapa:20079
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  1. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2002. "Distance to Frontier, Selection, and Economic Growth," NBER Working Papers 9066, National Bureau of Economic Research, Inc.
  2. Dominique Bianco, 2007. "An Inverted U-Relationship between Product Market Competition and Growth in an Extended Romerian Model: A Comment," Rivista di Politica Economica, SIPI Spa, vol. 97(5), pages 245-258, September.
  3. Alan C. Marco & Gordon C. Rausser, 2008. "The Role of Patent Rights in Mergers: Consolidation in Plant Biotechnology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 133-151.
  4. Blundell, Richard & Griffith, Rachel & van Reenen, John, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 529-54, July.
  5. An, Galina & Iyigun, Murat F., 2004. "The export skill content, learning by exporting and economic growth," Economics Letters, Elsevier, vol. 84(1), pages 29-34, July.
  6. 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.
  7. Marco, Alan C. & Rausser, Gordon C., 2008. "AJAE Appendix: The Role of Patent Rights in Mergers: Consolidation in Plant Biotechnology," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 90(1), February.
  8. Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal innovation in the theory of growth and development," Economics Working Papers 831, Department of Economics and Business, Universitat Pompeu Fabra.
  9. Mathias Dewatripont & Philippe Aghion & Patrick Rey, 1997. "Corporate governance, competition policy and industrial policy," ULB Institutional Repository 2013/9613, ULB -- Universite Libre de Bruxelles.
  10. repec:cdl:agrebk:297792 is not listed on IDEAS
  11. Stephen Nickell, 1993. "Competition and Corporate Performance," CEP Discussion Papers dp0182, Centre for Economic Performance, LSE.
  12. Alberto Bucci, 2003. "Market Power and Aggregate Economic Growth in Models with Endogenous Technological Change," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 62(2), pages 241-291, October.
  13. Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005. "Competition and Innovation: An Inverted-U Relationship," Scholarly Articles 4481507, Harvard University Department of Economics.
  14. Ben Gardiner & Ron Martin & Tyler Peter, 2004. "Competitiveness, Productivity and Economic Growth across the European Regions," ERSA conference papers ersa04p333, European Regional Science Association.
  15. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  16. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521816632.
  17. Alberto BUCCI, 2004. "An inverted-U relationship between product market competition and growth in an extended Romerian model," Departmental Working Papers 2004-26, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  18. Rivera-Batiz, Luis A & Romer, Paul M, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 531-55, May.
  19. Roberto Cellini & Guido Cozzi, 2005. "Intellectual Property, Competition and Growth: An Introduction," Rivista di Politica Economica, SIPI Spa, vol. 95(5), pages 3-6, September.
  20. Crespo Jorge & Martín Carmela & Velázquez Francisco J, 2004. "The Role of International Technology Spillovers in the Economic Growth of the OECD Countries," Global Economy Journal, De Gruyter, vol. 4(2), pages 1-20, December.
  21. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-85, May.
  22. John Scott, 1984. "Firm versus Industry Variability in R&D Intensity," NBER Chapters, in: R&D, Patents, and Productivity, pages 233-248 National Bureau of Economic Research, Inc.
  23. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919.
  24. Harris, Christopher & Howitt, Peter & Vickers, John & Aghion, Philippe, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Scholarly Articles 12375013, Harvard University Department of Economics.
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