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What is the Relationship between Competition and Productivity

  • Berthold Herrendorf

    (Arizona State University)

  • Yan Bai

    (Arizona State University)

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We demonstrate the usefulness of our results by using them to shed light on the existing empirical evidence. In particular, we argue that the studies of Syverson (2004), Schmitz (2005), and Lagakos (2007) are examples of how differences in the market size affect productivity. Our results are consistent with the positive relationship between competition and productivity that these studies find. In contrast, the study of Aghion et al (2005) is an example of how differences in entry costs affect productivity. Our results are consistent with the inverted U shape relationship that this study finds.

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File URL: https://economicdynamics.org/meetpapers/2009/paper_1142.pdf
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Paper provided by Society for Economic Dynamics in its series 2009 Meeting Papers with number 1142.

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Date of creation: 2009
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Handle: RePEc:red:sed009:1142
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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