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Competition and Growth in an Endogenous Growth Model with Expanding Product Variety without Scale Effects

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  • Bianco, Dominique

Abstract

The aim of this paper is to analyse the relationship between competition and growth in an endogenous growth model with expanding product variety without scale effect. In order to do this, we develop an extension of the Bucci (2005) model in which we eliminate the scale effects. We find that the relationship between competition and growth is always inverted U shaped. We explain this result by the composition of two effects on growth : resource allocation and profit incentive effects. For low values of product market competition, an increase of competition has an positive effect on growth. For large values of competition, we have a negative relationship between competition and growth.

Suggested Citation

  • Bianco, Dominique, 2007. "Competition and Growth in an Endogenous Growth Model with Expanding Product Variety without Scale Effects," MPRA Paper 6179, University Library of Munich, Germany, revised 08 Dec 2007.
  • Handle: RePEc:pra:mprapa:6179
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    File URL: https://mpra.ub.uni-muenchen.de/6179/1/MPRA_paper_6179.pdf
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    File URL: https://mpra.ub.uni-muenchen.de/9469/1/MPRA_paper_9469.pdf
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    References listed on IDEAS

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    1. Charles I. Jones, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 495-525.
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    Cited by:

    1. Pedro Bento, 2014. "Competition as a Discovery Procedure: Schumpeter Meets Hayek in a Model of Innovation," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(3), pages 124-152, July.
    2. Dominique BIANCO, 2009. "Competiton And Growth In An Endogenous Growth Model With Expanding Product Variety Without Scale Effects Revisited," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(4(10)_Win), pages 502-508.

    More about this item

    Keywords

    Endogenous Growth; Horizontal Differentiation; Technological Change; Imperfect Competition;

    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

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